Argentina is one of the largest economies in Latin America with a Gross Domestic Product (GDP) of approximately US$450 billion.
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, gas and lithium reserves, 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.
However, the historical volatility of economic growth and the accumulation of institutional obstacles have impeded the country’s development. The COVID.-19 pandemic and social isolation as a way to combat it aggravated the situation. Urban poverty in Argentina remains high and in the first semester it reached 40,9% of population, while extreme poverty increased to 10,5% and children poverty rose to 56,3%.
To deal with this situation, the country has prioritized social spending through various programs, including the Universal Child Allowance, a cash transfer program that reaches approximately 4 million children and adolescents up to age 18, 9.3% of the population.
After two years of recession and strong economic weaknesses, the impact of COVID-19 has been significant in Argentina. During the second quarter of 2020, the country suffered a decline in GDP of 16.2%, the largest retraction in its history.
To counteract the impacts of the crisis, the Government has implemented a package of emergency measures to protect the most vulnerable groups and help companies during the social isolation. This program has a high fiscal cost, which is expected to bring the fiscal deficit in 2020 to more than 10% of GDP (the highest in more than three decades).
Domestic economy continues to show strong macroeconomic imbalances. Annual inflation, although it has slowed since the beginning of the year, is still above 40%, despite price controls.
The Government has managed to conclude the process of restructuring all its debt in foreign currency (both local and external), significantly improving the maturity profile for the next eight years. In turn, the authorities have formally begun to talk with the International Monetary Fund to agree a new program for the maturities of the Stand-By loan in the next 3 years.
Last Updated: Oct 14, 2020