Argentina
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Argentina benefits from rich natural resources, a highly educated population, a globally competitive agricultural sector, and a diversified industrial base. The move after the 2001-2002 crisis to a more flexible exchange rate regime, along with sustained global and regional growth, a boost in domestic aggregate demand via monetary, fiscal, and income distribution policies, and favorable international commodity prices and interest rate trends were catalytic factors in supporting 5 consecutive years of greater than 8% annual GDP growth between 2003 and 2007. The economic recovery enabled the government to accumulate substantial official reserves (over $51 billion as of late August 2010). The reserves, combined with the absence of fresh borrowing from the international capital markets, helped insulate the economy from external shocks. A higher tax burden, improved tax collection efforts, and the recovery's strong impact on tax revenues supported the government's successful efforts to maintain primary fiscal surpluses since 2003.

Global financial turmoil and rapid declines in world commodity prices and economic growth during 2008 and 2009 resulted in diminished growth in 2008 and a mild recession in 2009. While the downtown was less severe in Argentina than elsewhere, the deterioration of both domestic and international demand complicated the fiscal situations of both the federal government and the provinces. The global economy’s current recovery during 2010 is helping to ameliorate some of those pressures.

Official figures show that Argentine GDP reached U.S. $306.7 billion in 2009, approximately U.S. $7,472 per capita, with investment increasing an estimated 10% for the year and representing approximately 20.5% of GDP. Analysts expect 2010 GDP growth in the 7% to 8% range or higher. Government of Argentina statistics showed unemployment was 8.4% in 2009. Poverty dropped in the aftermath of the economic crisis of 2001-2002, after having reached a record high of over 50%. In 2009, the official poverty level was 13.2%. Some unofficial estimates suggest that unemployment and poverty levels may be higher.

Argentina's exchange rate policy is based on a managed float, with an average exchange rate of 3.73 pesos per dollar in 2009. The rate in early September 2010 was 3.94 pesos per dollar. According to market analysts, the peso's real exchange rate had been undervalued in earlier years, which, along with historically high global commodity prices, helped lift export volumes and values to record levels. The decline in global commodity prices, slower global and domestic growth, and some changes in trade policy in late 2008 and in 2009 had an impact on foreign trade, with imports and exports falling 32% and 20% annually, respectively, in 2009.

Argentina had a $16.7 billion trade surplus in 2009. Foreign trade was approximately 31% of GDP in 2009 (up from only 10% in 1990) and played an increasingly important role in Argentina's economic development. Exports totaled approximately 18% of GDP in 2009 (up from 15% in 2002), and key export markets included MERCOSUR (25% of exports), the EU (19%), and NAFTA countries (9%). Two-way trade in goods with the U.S. in 2009 totaled about $9.4 billion according to the U.S. International Trade Commission. Total two-way trade in services in 2009 was $5.1 billion (according to the Bureau of Economic Analysis, U.S. Department of Commerce). The production of grains, cattle, and other agricultural goods continues to be the backbone of Argentina's export economy. High-technology goods and services are emerging as significant export sectors.

Continuing Argentine arrears to international creditors and a large number of arbitration claims filed by foreign companies are legacies of the 2001-2002 economic crisis that remain to be resolved. Outstanding debts include over $8 billion owed to official creditors, including about $500 million owed to the United States. From May to June 2010, the Government of Argentina offered a debt restructuring for private holders of defaulted bonds. Two-thirds of the private bondholders participated, leaving approximately $6 billion in private default claims still outstanding.

Nearly 500 U.S. companies are currently operating in Argentina, employing over 155,000 Argentine workers. U.S. investment in Argentina is concentrated in the manufacturing, information, and financial sectors.

Economy (2009)
GDP (2009): $306.7 billion.
Annual real growth rate (2009 est.): +0.9%.
Per capita GDP (2009): $7,472.
Natural resources: Fertile plains (pampas); minerals--lead, zinc, tin, copper, iron, manganese, oil, and uranium.
Agriculture (7% of GDP; including agribusiness, about 58% of exports by value): Products--oilseeds and by-products, grains, livestock products.
Industry (32% of GDP): Types--food processing, oil refining, machinery and equipment, textiles, chemicals and petrochemicals.
Trade: Exports ($55.5 billion)--oilseed by-products, vegetable oils, cars, fuels, grains. Major markets--MERCOSUR 25%; EU 19%; NAFTA 9%. Imports ($38.8 billion)--machinery, vehicles and transport products, chemicals. Major suppliers--MERCOSUR 33%; EU 17%, NAFTA 17%. Imported goods from the United States totaled approx. 13.2% of Argentine imported goods.

Tags:  resources population crisis aggregate monetary rate