Main Industry SectorsEconomic OverviewForeign Direct Investment [FDI]FDI Government MeasuresCountry Strong PointsCountry Weak PointsForeign Trade Overview
Having lost the position of a superpower it occupied at the beginning of the 20thcentury, Argentina remains an important world economy, namely due to its agriculturalproduction. The agricultural sector, which is based livestock farming, cultivation of cereals(wheat, corn, soy) and citrus fruit, represents around 10% of the countrys GDP. Rich in energy resources, Argentina is the worlds fourth largest oil producer and first largestnatural gas producer in Latin America. Argentina’s sector has vastly expanded over these last few years. It contributes to more thanone third of the GDP. Food packaging (in particular meat packing, flour grinding, and canning) and flour-milling arethe countrys main industries. The services sector followed the same trend as the industry sector. Argentina contributes to more than half of the GDP. Argentina has specialized in areas of high-tech services and offers excellent value for moneyspecifically in software development, call centers and nuclear energy.
After the severe recession, which lead to the Argentinean bankruptcy in 2001-2002, theeconomy saw a rapid and stable growth, before being hit by the global financial crisis.In 2009 the economy contracted sharply as an effect of the fall in demand (0.9% ofgrowth) but in 2010 it experienced a quick and vigorous recovery, together with the restof the South-American continent.The 2010 growth, estimated at 7.5% and driven by household consumption, publicspending good performance of the agricultural sector and dynamic trade withBrazil, should nevertheless slow down in 2011.In the context of the coming 2011 elections, the government of Cristina Fernandez deKirchner is likely to continue the expansionist policy to stimulate domestic demand.Controlling the increasing inflation also remains a priority.The Argentinean’s economy is suffering from structural faults:The financial system remains fragile and the country needs to deal with an energy crisisdues to lack of investment in this sector since 2004.The social situation of the country is sensitive: unemployment and malnutritionpersist, with 25% of the population living under the poverty line.
FDI influx into Argentina which were growing steadily since 2004 halved in 2009 as aneffect of the global economic recession. They should continue their recovery which began in 2010. Argentina ranks 4th amongst the South American countries that attract the most FDIflow (after Colombia, Brazil and Chile). The three main investors in Argentina are the United States, Spain and France. Argentinas poor ranking in this classification is due the disastrous image conveyed bythe country during the economic crisis which affected its economy between the end of 90sand the beginning of 2000. Argentina has clear strengths: Its natural resources are considerable (copper, gas and oil) and its workforce is highly Skilled and competitive.
The government has established various measures to encourage foreigninvestment in the form of incentives to invest in capital goods andinfrastructures, financing programs, capacity promotion (employment and qualityamongst others), encouraging innovation and technologicaldevelopment, geographic incentives and sectorial investments.
A wealth of raw materials, good level of education, a human developmentindicator noticeably above the Latin American average, and strong growthfor several years now.
The banking sector is fragile and under-capitalized; Investments in energy are insufficient and inflation is high.
Argentina is very open to international exchanges, foreign trade representing around 45% of theGDP. Argentina main commercial partners are the Mercosul countries (Brazil, Paraguay andUruguay), China and the United States. Argentina exports more than it imports and its trade balance is therefore in surplus. The devaluation of the peso has boosted Argentinas exports (especially of agricultural products). The increased rate of the Argentinean peso compared to the American dollar risks damaging thecompetitiveness of Argentinas exports which would cause the balance of trade to deteriorate.
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