Overview

With a Gross Domestic Product (GDP) of more than US$550 million, Argentina is one of the largest economies in Latin America. Argentina is currently undergoing an economic transformation that promotes sustainable economic development with social inclusion and integration into the global economy.

Argentina has vast natural resources in energy and agriculture. Within its 2.8 million square kilometers of territory, Argentina is endowed with extraordinary fertile lands and has great potential for renewable energy. It is a leading food producer with large-scale agricultural and livestock industries.  In addition, Argentina has significant opportunities in some manufacturing subsectors, and innovative services in high tech industries.

The economy enjoyed significant growth over the past decade. Argentina invested heavily in health and education, areas which account for 7% and 6% of GDP, respectively.

Argentina was the top performer in the region in reducing poverty and boosting shared prosperity between 2004 and 2008. Incomes of the bottom 40% grew at an annualized rate of 11.8% compared to average income growth of 7.6%. This trend continued but slowed after 2008. As of 2014, 12.7% lived in poverty – defined as living on under $4 a-day. A third of the population lives on between 4 and 10 dollars a day and remains at risk of falling back into poverty.

The country prioritized social spending through various programs, including the Universal Child Allowance, which reaches approximately 3.7 million children and adolescents up to age 18, 9.3% of the population.

Presidential elections at the end of 2015 led to a significant change in Argentine economic policy. The new administration has moved with significant speed to implement core reforms such as the unification of the exchange rate, the agreement with international creditors, the modernization of the import regime, reduction of inflation and reform of national statistics system.

In addition, Argentina has taken a very active role on the international stage confirming that the country will hold the presidency of the G20 in 2018, expressing intention to join the OECD and become an observer in the Pacific Alliance.

After an economic growth of 2.4% in 2015, economic growth in the first quarter of 2016 slowed to 0.5% yoy, and the first official estimates for the first half of 2016 show an annual fall of 1.3%.

The primary deficit of 2015 was revised to 5% of GDP, compared to 3.6% in 2014. The accumulated primary deficit to July is 1.9% of GDP, similar to the same month last year. The government plans a gradual convergence to a primary fiscal balance by 2019.

Last Updated: Sep 22, 2016

The WBG strategy is built around three broad themes:

  • (a) sustained employment creation in farms and firms
  • (b) improving availability of assets for people and households
  • (c) reducing environmental risks and safeguarding natural resources

These thematic areas were selected for their contribution to achieving sustained poverty reduction and shared prosperity.

Some emblematic programs will contribute to reduce average transit time to city centers from poor neighborhoods in two metropolitan areas by 15%; or to increase by 12% the gross value of agricultural production ($/ha) of 80,000 small and medium-size farms in lower-income areas; and will support an increase in effective national healthcare coverage from 28% to 50%. 

The strategy focuses on working with the country’s poorest provinces and in large urban areas.  There will be support for programs designed to increase the employability of young people through training, apprentice programs and corporate partnerships. In large cities, the strategy will promote activities that include logistics solutions, urban transport, basic services, skills development and governance in communities and low-income municipalities.

Last Updated: Sep 22, 2016

Argentina currently has a portfolio of 21 investment projects with US$5.8 billion in committed loans and four grants (two from the Global Environment Facility) for US$27.3 million. The portfolio concentrates on programs in health, environment, education, infrastructure, the labor market and social protection.

In the framework of the strategy, the Board of Directors recently has approved financing for three programs totaling almost US$850 million: the expansion of the Universal Child Allowance Program (AUH, in Spanish) to include an additional 1.5 million children (US$600 million); the project to strengthen flood risk management in Buenos Aires City that will improve drainage systems to benefit three million people (US$200 million); and an additional financing for the Unleashing Productive Innovation Project (US$45 million).

Moreover, a series of projects are under implementation: the second Project to Improve Rural Education (US$ 250 million), which will benefit more than one million students and teachers in rural areas;  Support to Youth Employment (US$ 425 million), which promotes the employment of some 540,000 vulnerable youth; Renewable Energy for Rural Areas (PERMER II, US$ 200 million), which works to expand access of isolated rural populations to alternative energy;   Native Forests and Community Project (US$ 58.7 million), which supports sustainable forest management in the Gran Chaco zone; and Protecting the Vulnerable Population from Chronic Non-Communicable Diseases project (US$350 million) that seeks to improve the access to control and prevention services among 3.2 million adults aged between 40 and 64.

In the northern provinces of Catamarca, Chaco, Corrientes, Formosa, Jujuy, Misiones, Salta, Tucumán and Santiago del Estero, a region that is home to 7.5 million people, the World Bank has provided US$ 800 million for water and road infrastructure projects that form part of the National Government’s Norte Grande Development Program.

Health care is supported by the US$ 400 million Plan Sumar to improve access to health services for the nearly 70% of the population without health insurance, with an emphasis on children, adolescents and low-income women through conditional cash transfers. Moreover, thanks to an additionalUS$200 million of financing, men under 65 without coverage are beneficiaries for the first time.

In the environmental area, the Matanza-Riachuelo Basin Sustainable Development Project provides US$ 718 million in assistance to clean up the river basin by improving sewage services and expanding water treatment capacity.

Throughout the country, some 70,000 small and medium-scale farmers—one-third of all farmers— are benefiting from initiatives such as the Second Provincial Agricultural Development Project (PROSAP), which provides US$ 300 million in assistance to support new public infrastructure and investment in services in rural areas.

Finally, the US$ 30 million Road Safety Project has reduced the rate of traffic injuries and fatalities by strengthening the country's institutional framework and road safety management system.

The World Bank is also carrying out a number of analytical studies to help achieve sustained poverty reduction in Argentina. The latest reports focus on some topics such as agriculture, pensions, subsidies, and cities, among others.

Latest Reports: 

 

Last Updated: Sep 22, 2016


LENDING

Argentina: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments