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Economic Affairs

Argentina: Economic Affairs

In 2015, according to estimates by the World Bank, Argentina’s gross national income (GNI), measured at average 2013–15 prices, was US $541,108m., equivalent to $12,460 per head. During 2006–15, it was estimated, Argentina’s population increased at an average rate of 1.0% per year, while gross domestic product (GDP) per head increased, in real terms, by an average of 1.6% per year. According to official estimates, overall GDP increased, in real terms, at an average annual rate of 2.6% in 2006–15; growth declined by 2.5% in 2014, but increased by a preliminary 2.5% in 2015.

Agriculture (including forestry and fishing) contributed a preliminary 6.1% of GDP in 2015. The sector engaged 6.8% of the total labour force in mid-2015, according to estimates by the United Nations Food and Agriculture Organization. The principal cash crops are wheat, maize, sugar cane and soybeans. Beef production is also important. During 2006–15, according to official preliminary figures, agricultural GDP increased at an average annual rate of 1.5%. The sector grew by 7.3% in 2015.

Industry (including mining, manufacturing, construction and power) contributed an estimated 28.2% of GDP in 2015. During 2006–15, according to official preliminary figures, industrial GDP increased, in real terms, at an average annual rate of 1.4%; sectoral GDP declined by 3.5% in 2014, but increased by 1.2% in 2015.

Mining contributed an estimated 3.9% of GDP in 2015. Petroleum reserves totalled 2,380m. barrels in 2015 and production stood at 636,677 barrels per day in the same year. Natural gas production was 36,491m. cu m and proven gas reserves totalled 332,217m. cu m in 2015. According to official government estimates, the GDP of the mining sector declined by 1.0% during 2006–15; the sector’s GDP increased by 2.8% in 2015.

Manufacturing contributed an estimated 17.3% of GDP in 2015. During 2006–15, according to official preliminary figures, manufacturing GDP increased, in real terms, at an average annual rate of 1.6%; manufacturing GDP decreased by 5.1% in 2014 and increased by 0.3% in 2015.

The construction sector contributed an estimated 5.6% of GDP in 2015. During 2006–15, according to official government figures, the GDP of the sector increased at an average annual rate of 2.0%; construction GDP declined by 2.0% in 2014, but increased by 3.0% in 2015.

Energy is derived principally from thermal power (largely fuelled by natural gas), responsible for an estimated 69.5% of national production in 2014. Hydroelectricity accounted for an estimated 26.2% of Argentina’s total energy production in the same year, while the country’s two nuclear power stations produced 4.3% of energy in 2014, according to official sources. A third nuclear reactor began operations in 2014 and in July 2016 a Memorandum of Understanding was signed with the People’s Republic of China to finance construction of a fourth and fifth reactor. Construction of the first project was scheduled to begin in early 2017.In 2015 imports of mineral fuels comprised a provisional 11.0% of the country’s total imports.

Services accounted for an estimated 65.7% of GDP in 2015. According to official preliminary figures, the GDP of the services sector increased, in real terms, at an average rate of 3.2% per year during 2006–15; sectoral GDP decreased by 1.6% in 2014, but increased by 2.4% in 2015.

In 2015 Argentina recorded a visible merchandise trade deficit of US $453m., while there was a deficit of $15,934m. on the current account of the balance of payments. In 2015, according to provisional figures, the principal source of imports was Brazil (21.9%), followed by China and the USA. Brazil was also the principal recipient of exports, accounting for 17.8% of total exports in that year, followed again by China and the USA. The principal exports in 2015, according to provisional figures, were residues from the food industries and prepared animal feed, followed by vehicles, cereals, oil seeds and oleaginous fruits, and fats and oils. The principal imports in 2015, again according to provisional figures, were boilers, machines and mechanical appliances, vehicles, electrical machinery, and mineral fuels and lubricants.

In 2016 a consolidated general government budgetary surplus of 8,523m. new pesos was forecast. Argentina’s general government gross debt was 3,046,084m. new pesos in 2015, equivalent to 52.1% of GDP. Argentina’s total external debt in 2013 was US $136,272m., of which $67,462m. was public and publicly guaranteed debt. In that year, the cost of servicing long-term public and publicly guaranteed debt and repayments to the International Monetary Fund (IMF) was equivalent to 13.7% of the value of exports of goods, services and income (excluding workers’ remittances). The annual rate of inflation averaged 9.5% in 2004–13; consumer prices increased by 10.9% in 2013, according to government figures, although the real rate was thought by independent sources to be much higher; incoming President Mauricio Macri suspended publication of consumer prices in late 2015 until more transparency in official figures could be introduced. According to labour force survey figures, the national unemployment rate was 9.3% in the second quarter of 2016.

The Government of Mauricio Macri that took office in December 2015 faced several economic challenges. Although growth had been steady under the Peronist administration of Cristina Fernández de Kirchner, the rate of inflation continued to increase, central bank reserves were severely depleted and the fiscal deficit was widening. One of the new Government’s first acts was to end the strict capital controls, in place since 2011, in order to allow the peso to float freely against the US dollar. The controls, while steadying foreign exchange markets, had stifled exports and foreign investment. Nevertheless, their removal brought about a 30% devaluation of the peso, leading to further increases in already high consumer prices. The inflation rate had been notoriously difficult to ascertain: in June 2015 the IMF had asserted that Argentina was not providing credible economic data, and set a deadline of July 2016 for the country to comply with international criteria. The new Minister of Economy and Finance, Alfonso Prat-Gay, pledged to reduce the annual inflation rate to 20%–25% in 2016, although by the end of the year it was estimated that the rate stood at closer to 36%. Several measures were implemented in an attempt to reduce the fiscal deficit, including increases in energy tariffs, and wage restraints. The ongoing dispute with the hold-out creditors (see Debt ‘default’ ) meant that Argentina had been denied access to international credit. The new centre-right Government made resolution of the debt crisis a priority: negotiations with the so-called ‘vulture’ fundholders took place in early 2016, and in March the impasse was successfully resolved. Argentina’s return to international markets in the following month would, it was hoped, provide access to much needed foreign investment that would reinvigorate the economy. According to figures released in September 2016, the first since the reform of the state statistics agency, one in three of the population were living in poverty, a much higher figure than had been released previously. GDP was projected to contract by 1.8% in 2016, according to the IMF, before growing by 2.7% in 2017 as the reforms implemented by the Macri Government bore fruit.

Citation: Economic Affairs (Argentina), in Europa World online. London, Routledge. Retrieved 16 December 2017 from http://www.europaworld.com/pub/entry/ar.is.57

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