With a Gross Domestic Product (GDP) of approximately US$450 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.
However, the historical volatility of economic growth has limited the country’s development. Urban poverty in Argentina reach 40,6% of the population in the first semester of 2021 and 10,7% argentines live in extreme poverty. Poverty in childhood, for children under 14 years old, is at 54,3%.
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.
The impact of COVID-19 has been significant in Argentina. During 2020, the country’s GDP lost 9.9 percentage points, the largest retraction since 2002.
Although the economy has begun to recover, in mid-2021 it is still 3.3% below pre-pandemic levels, partly affected by a new wave of COVID in the second quarter of 2021. A reduction in the primary fiscal deficit is expected in 2021, on one hand, due to the ending of emergency programs implemented to fight the impacts of the pandemic and on the other, to extraordinary resources from the increase in international commodity prices and an exception tax on large fortunes. However, the domestic economy continues to show macroeconomic imbalances. Annual inflation, which had decelerated in a context of a decline in economic activity in 2020, stands at 51.4% in August.
Regarding its external debt, 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. Additionally, authorities are holding conversation with the International Monetary Fund on a new program.
Last Updated: Oct 04, 2021