Argentina, which has significant and export-oriented agriculture as well as a diversified industry, is Latin America’s third largest economy after Brazil and Mexico. Although the country’s share of the continent’s total GDP has fallen somewhat since the 1970s, partly due to a slower rate of population growth, it is still high.
Development of Argentina’s and Latin America’s GDP in the 2000s.
|Year||Change in Argentina’s GDP compared to the previous year (%)||Change in Latin America’s GDP compared to the previous year (%)|
Argentina was one of the hardest hit countries during the economic and political crisis of the 1980s, but recovered in the 1990s, especially through President Carlos Menem’s and Finance Minister Domingo Cavallo’s reform program. This linked the currency to the dollar, lowered import duties and privatized and cut down large sections of the public sector. Argentina’s membership in the Mercosur Customs Union also played a major role in the country’s economic development.
Several of the social and economic indicators that placed Argentina among the main countries on the continent deteriorated after the severe economic and political crisis of 2001–02. A combination of deflation and overvalued currency then led to an increase in central government debt and the budget deficit, at the same time as the government withdrew to take austerity measures. Inflation rose, and as the withdrawal from the banks increased, the government stepped in, whereby riots and looting broke out at year-end 2001–02.
In the following years, inflation declined and GDP recovered, but unemployment and poverty continued to be high. In 2008, the country was hit by the international financial crisis and declining agricultural exports.
Despite strong economic growth in the 2010s, the Argentine economy again fell into imbalance with rising inflation as a result. In 2012, the government decided to state just over half of the oil company YPF, which was largely owned by Spanish Repsol. The decision was heavily criticized by both Spain and other countries. The government also decided to impose restrictions on the possibility of buying dollars freely in an attempt to curb the fall of the currency.
However, the economic crisis, with high inflation and falling real wages, persisted. In January 2014, the Argentine peso plunged in value against the dollar since the central bank stopped trying to keep up the exchange rate. Policemen, teachers and other public servants went on strike and the unions carried out a general strike in protest of the policy pursued.
Repayments of the country’s national debt
One of the causes of the economic uncertainty was the international requirements for repayment of Argentina’s national debt from the late 1990s. When the economy collapsed in 2002, Argentina canceled all payments and has since tried to agree with lenders on new terms. Before settling the old debt, Argentina is basically blocked from getting new credit in the international currency market. To date, over 90 percent of lenders have accepted substantial write-downs of their receivables, and in early 2014, Argentina signed an agreement with several countries in the so-called Paris Club regarding the terms of repayment of $ 9.5 billion. However, in August 2014, the country was forced to suspend its payments after losing a legal process in the United States regarding 1,
A court banned Argentina from making payments to other lenders before hedge funds that did not agree to write down their debts received their money. If Argentina pays the funds, other lenders who have accepted debt cancellation can cancel their agreements and demand full payment. This would lead to a further $ 15-20 billion in costs, which is more than Argentina can pay. However, the Argentine government does not rule out continued negotiations with the hedge funds.
Agriculture, forestry and fishing
Of Argentina’s surface area, 10 percent is land, while 52 percent is meadow land, of which about one-tenth is permanent pasture. Agriculture has traditionally been the basis of the country’s economy, but in recent years has declined in importance. However, Argentina is one of the world’s largest producers of beef, wool, wheat and maize, which are also the most important export goods. Cereals, mainly wheat and maize but also rye, oats, rice and millet, are grown on 70 percent of the arable land. Other important crops are cotton, sugar cane, fruit and grapes but mainly soybeans, which in recent years have increased strongly.
A large part of agriculture is concentrated in Pampas, which accounts for 2/3 of the production of cereals and beef. Livestock management occurs across virtually the entire country. In the peripheral areas, one has often specialized in a certain type of products, such as wool in Patagonia, wine and fruit around Mendoza and Cuyo and the national beverage mate in the north. San Miguel de Tucuman is the center of sugar production. Argentine agriculture is characterized by large-scale operation and long-run mechanization. Livestock management is dominated by large estates, estancias, which can cover up to 200,000 ha. The average estancian comprises about 3,000 hectares and has 2,000–3,000 cattle. A large part of agricultural products are consumed in the country.
About 22 percent of the country’s area is covered by forest, but forestry is poorly developed and accounts for only half of the country’s need for timber products. The most important forest product is quebracho, a hard type of wood used as building material and for the production of tannery.
Fishing still plays a rather minor role and is mainly concentrated in the northeastern parts of the country. Argentina has a small export of fish.
Minerals and energy
Argentina’s rich commodity reserves, with the exception of oil and natural gas, are not concentrated and are only used to a limited extent. Argentina is self-sufficient in lead and zinc, and there is also some production of gold, silver, copper, tin, manganese and tungsten. Iron ore is extracted in Sierra Zapla in the north and Sierra Grande in Patagonia and coal at Rio Turbio in southern Patagonia, but the need for these raw materials is mainly covered by imports.
There are large uranium ore deposits, and as early as 1950, President Perón embarked on an ambitious nuclear energy program, which has, however, been cut down and almost ceased in recent years. Argentina is almost self-sufficient when it comes to energy, especially through the Golfo San Jorge oil field in Patagonia. In 1999, Argentina became Latin America’s largest producer of natural gas after extensive exploration at Eldslandet began to be exploited. After 2007, however, production has decreased, and in recent years the country has had a larger import than natural gas exports. The country also has significant water energy potential, and on the Paraná River Argentina and Paraguay have a large power plant, Yacyretá, in common.
Traditionally, the industry has been based primarily on the processing of agricultural products, such as the production of food, textiles and leather. With state support and in the protection of customs walls, after the Second World War, a fairly varied production was developed, which was primarily intended for the domestic market such as plastics, steel, cement, machinery and petrochemical products. Through the reform program since 1991 and the deepening of the Mercosur Customs Union, the importance of the industry has increased. The three most important industries are food production, the automotive industry and the chemical industry.
The state has traditionally been active in stimulating industry development, but since the extensive program for privatization and sale of state-owned enterprises was started in 1989, these have largely disappeared. Some industries, e.g. the car industry, however, has long been completely foreign-owned. The industry is preferably located in the Buenos Aires area, in the major cities and in the ports along the Paraná River and in the vicinity of important raw material deposits. In most places, the industry is mainly focused on the processing of local products, and apart from Buenos Aires, there is only a more versatile industry in Córdoba and Rosario. Around Rosario are the country’s largest steel mills, petrochemical plants and large slaughterhouses.
According to Countryaah, Argentina’s traditionally large trade surplus fell during the 1990s, as a result of reduced import duties and the transformation of the Mercosur Free Trade Area into a customs union in 1995, due to increased imports. For several years in the 1990s, there were deficits in foreign trade. Apart from agricultural products, mainly petroleum products and vehicles are exported, while imports consist mainly of machinery, vehicles, basic industrial products (paper, textiles) and oil and natural gas. Among individual countries, the largest export markets are Brazil, the United States and China, while imports mainly come from Brazil, China and the United States.
Tourism and gastronomy
Argentina is visited annually by about 5 million tourists. The country offers great variations, from the wooded, subtropical provinces in the north to the magnificent and popular heath, rock and island landscape of Patagonia (including the Fire Land) in the south. To the west, at the foot of the Andes, is Argentina’s main wine district, Mendoza. Those who want to ski during the European summer can try the ski resorts on the slopes of the Andes further south: most famous are Bariloche and San Martín. For the culturally interested, a visit to the ruins of the Jesuit mission stations from the 17th and 18th centuries is recommended; Of the total thirty plants, half, and the best preserved, are located in northeastern Argentina. If you follow Paraná’s eastern shore further north you will reach the famous waterfalls in the tributary of Iguaçú, on the border with Brazil, most of which are on the Argentine side. The neighborhood there is also very rich in butterflies.
Buenos Aires is perhaps the South American capital that gives the strongest impression of European big city. In the center are elegant shops, stately monumental buildings and Teatro Colon, one of the world’s largest opera scenes. Picturesque and slightly older neighborhoods with low buildings and many nice little pubs can be found in the oldest district, La Boca, on the promontory between the small river Riachuelo and Río de la Plata. In Buenos Aires, as in many other Argentine cities, there are some fine Baroque churches, and the Museo Nacional de Bellas Artes has both a representative floor with Argentine 19th and 20th century art and an excellent European art collection. Also of interest is the Museum of Spanish-American Art and Crafts.
Argentina has no Native American culinary roots, and the cuisine is therefore based on the European, mainly Spanish and Italian. It is not surprising that beef dominates the food and that the typical restaurant is a “steakhouse” where you can eat a thick grilled steak (churrasco) or grilled meats (parrillada) – well-seasoned sausages and blood sausages are an Argentinean specialty – which fits well with the spicy Mendozavine. However, there are other than pure meat dishes; Rich omelets and pies are popular, corn and pumpkin are common ingredients. Carbonadais a stew of meat, corn and pumpkin, served in the huge, hollowed out pumpkin peel. Buenos Aires residents like to visit the city’s elegantly decorated cafes (confiterías) in the afternoon to enjoy, for example, an almendrado, ice cream pastry with almond and chocolate sauce. In the evening, a place is often visited where you play and sing tango – the tango holds much of the Argentine nostalgia and cultural identity.