Argentina’s economy is trying to catch its breath and regain the growth that was in part lost by a drop in agricultural production, low global demand for its manufactured exports, and by an energy deficit. Latin America’s third economy, Argentina grew 8.9% in 2011, with a positive CAGR of 5.1% over the past four years. But it had a significant downturn in 2012, with a growth rate of only 1.9% - a reflection of high inflation and the negative impact that exchange and trade controls had on investments. In 2013, the government has promised to regain growth through a policy of expansion, announcing a 4.9% growth for the August forecast (a record automobile production and a harvest increase will help this recovery).
Over the past thirty years, the country has suffered from several attempts to recover its economy: nationalization of industries and social reforms, followed by a privatization program, the linking of its peso to the dollar, and freezing of personal property. The country regained growth after 2003 by fighting corruption, and through debt repayment and development sustainability. Currently, there are positive points in Argentina’s economy, such as growth in the industry sections and the creation of a social development fund. However, the adoption of some policies has led to serious consequences (including inflation, disparity in exchange rates, restrictions on dollar purchase, energy import increase and restrictions on manufactured import) and this has generated market tension.
The country still faces social dissatisfaction and some persistent structural challenges such as high levels of corruption, a high rate of unemployment, and the need for better health services and education. The current trajectory encompasses some important considerations, such as the reduction of transactions with partnering countries (e.g. Brazil), prohibition of outward remittance, inflationary pressures, demands for more investments in energy, concerns over bad management of public finances, and the return to protectionism in order to strengthen local industries. Last year, the government declared YPF as being of ‘national public interest’ and expropriated 51% of the shares of the Spanish oil company Repsol. While the partnership between YPF and Chevron remains in a letter of intent, changes are still required to the country’s energy policy.