With a Gross Domestic Product (GDP) of approximately US$490 billion, Argentina is one of the largest economies in Latin America.
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.
Economic activity has recovered faster than expected, with an increase of 10.4% of GDP in 2021, after a fall of 9.9% in 2020 in the context of the crisis unleashed by COVID-19. At the end of 2021, the economy was 5% above its pre-pandemic level of activity. The fiscal deficit was reduced compared to 2020, mainly because of the reduction in spending related to COVID-19 and extraordinary revenues, such as those from the tax on large fortunes, as well as higher collections from the rights of exports, in a context of rising international commodity prices. However, the fiscal deficit remains high and the monetary issue to finance the deficit contributed to accelerating the inflation rate, which as in August 2022 was 71% annual. The economy continues to show macroeconomic imbalances that limit the sustainability of economic growth.
After the transfer of private debt in 2020, an agreement was reached with the International Monetary Fund in early 2022 for a new Extended Fund Facility (EFF). With a duration of 30 months and a four-and-a-half-year grace period, this program will allow the country to postpone its maturities with the agency and strengthen its reserves in the short term. Among the commitments is the gradual fiscal consolidation - reaching equilibrium in 2025 - together with the reduction of monetary financing of the deficit.
Last Updated: Oct 03, 2022