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Economic Affairs

Argentina: Economic Affairs

In 2017, according to estimates by the World Bank, Argentina’s gross national income (GNI), measured at average 2015–17 prices, was US $577,148m., equivalent to $13,040 per head (or US $20,270 per head on an international purchasing-power parity basis). During 2008–17, 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 0.3% per year. According to official estimates, overall GDP increased, in real terms, at an average annual rate of 1.3% in 2008–17; growth declined by 1.8% in 2016, but increased by a preliminary 2.9% in 2017.

Agriculture (including forestry and fishing) contributed a preliminary 6.7% of GDP in 2017. 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 2008–17, according to official preliminary figures, agricultural GDP increased at an average annual rate of 0.8%. The sector decreased by 4.5% in 2016, but increased by a preliminary 4.1% in 2017.

Industry (including mining, manufacturing, construction and power) contributed a preliminary 25.9% of GDP in 2017. During 2008–17, according to official preliminary figures, industrial GDP increased, in real terms, at an average annual rate of 0.1%; sectoral GDP declined by 5.5% in 2016, but grew by a preliminary 2.7% in 2017.

Mining contributed a preliminary 3.5% of GDP in 2017. Petroleum reserves totalled 2,162m. barrels in 2017 and production stood at 593,394 barrels per day in the same year. Natural gas production was 37,150m. cu m and proven gas reserves totalled 327,410m. cu m in 2017. According to official government estimates, the GDP of the mining sector declined by 1.7% during 2008–17; the sector’s GDP decreased by 5.5% in 2016, and further by a preliminary 3.4% in 2017.

Manufacturing contributed a preliminary 15.4% of GDP in 2017. During 2008–17, according to official preliminary figures, manufacturing GDP increased, in real terms, at an average annual rate of 0.2%; manufacturing GDP decreased by 5.2% in 2016, but increased by a preliminary 3.0% in 2017.

The construction sector contributed a preliminary 4.9% of GDP in 2017. During 2008–17, according to official government figures, the GDP of the sector decreased at an average annual rate of 0.2%; construction GDP decreased by 11.2% in 2016, but increased by a preliminary 10.3% in 2017.

Energy is derived principally from thermal power (largely fuelled by natural gas), responsible for an estimated 65.9% of national production in 2016. Hydroelectricity accounted for an estimated 21.8% of Argentina’s total energy production in the same year, while the country’s three nuclear power stations produced 5.9% of energy in 2016, according to official sources. A fourth and fifth nuclear reactor, built with Chinese and Russian funding, were scheduled to begin operations in the mid-2020s.In 2017 imports of mineral fuels comprised a provisional 8.2% of the country’s total imports.

Services accounted for an estimated 67.4% of GDP in 2017. According to official preliminary figures, the GDP of the services sector increased, in real terms, at an average rate of 1.9% per year during 2008–17; sectoral GDP increased by a preliminary 2.4% in 2017.

In 2017 Argentina recorded a visible merchandise trade deficit of US $5,547m., while there was a deficit of $31,324m. on the current account of the balance of payments. In 2017, according to provisional figures, the principal source of imports was Brazil (26.7%), followed by the People’s Republic of China and the USA. Brazil was also the principal recipient of exports, accounting for 15.9% of total exports in that year, followed again by China and the USA. The principal exports in 2017, according to provisional figures, were residues from the food industries and prepared animal feed, followed by cereals, vehicles, fats and oils, and oil seeds and oleaginous fruits. The principal imports in 2017, again according to provisional figures, were vehicles, boilers, machines and mechanical appliances, electrical machinery, and mineral fuels and lubricants.

In 2019 a consolidated general government budgetary deficit of 600,285.7m. new pesos was forecast. Argentina’s general government gross debt was 6,077,636m. new pesos in 2017, equivalent to 57.6% of GDP. Argentina’s total external debt in 2016 was US $190,490m., of which $101,631m. 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 34.9% of the value of exports of goods, services and income (excluding workers’ remittances). The annual rate of inflation averaged 9.5% in 2004–13, 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 reliable official figures could be introduced. The annual rate of inflation was 12.9% in 2017. According to labour force survey figures, the national unemployment rate was 9.1% in the first quarter of 2018.

The Government of Mauricio Macri that took office in December 2015 faced several economic challenges, including a high inflation rate, depleted reserves and an increasing fiscal deficit. The new Government ended the strict capital controls in order to allow the peso to float freely against the US dollar. However, their removal brought about a 30% devaluation of the peso, leading to further increases in consumer prices. Several measures were implemented in an attempt to reduce the fiscal deficit, including the phasing out of energy subsidies, and wage restraints. Exchange controls were also eased and the exchange rate unified. Following resolution of the dispute with the hold-out creditors (see Debt ‘default’ ), Argentina returned to the international markets with the largest bond ever issued by an emerging market economy. Although inflows of foreign funds grew, inflation and unemployment remained high, and GDP declined by 1.8% in 2016. President Macri took advantage of his party’s increased representation in Congress following the 2017 mid-term elections to gain approval for business-friendly economic reforms, most notably to the tax, labour and pension systems. The measures were intended to increase competition and investment, as well as boosting employment. The economy returned to growth, of 2.9%, in that year. However, the annual rate of inflation continued to rise in 2018, raising fears from investors and, from April, prompting a further fall in the value of the peso against the US dollar. The rise in consumer prices was exacerbated by further increases in fuel and utility prices, measures that caused widespread popular discontent. In June the Government announced that it had secured a US $50,000m. stand-by agreement with the IMF, but its request soon after for the early release of some of these funds led to worries that the currency was in freefall. In exchange for the IMF loan, the Government agreed to accelerate its plan to eliminate the fiscal deficit by 2020; to this end, the budget for 2019, approved by the Congress in November 2018, contained further cuts in expenditure, including to education, healthcare, transport and public works projects, although Macri did relent on a further increase in gas prices. The economy contracted by 2.5% in 2018, according to official figures, while annual inflation rose to 34.3%.

Citation: Economic Affairs (Argentina), in Europa World online. London, Routledge. Retrieved 14 November 2019 from

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