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Economic Overview of Argentina

by Suleman

Argentina, officially the Argentine Republic, cased in South America. It borders Chile, Bolivia, Peru, Paraguay and Uruguay. It is the second-largest country just behind Brazil in South America with a population of 44.49 million as of 2018. Argentina is among the largest economies in Latin America with a GDP of about US$ 450 billion – it is an upper-income economy. Historically, Argentina’s economy has been uneven evident in the high economic growth, which is later accompanied by a severe recession, especially in the twentieth century, where poverty levels and income maldistribution have increased (Peralta-Ramos, 2019).

At the beginning of the twentieth century, Argentina was on par with Australia and Canada having one of the ten highly ranked GDP per capita levels globally – it surpassed France and Italy. Since 2018, the country’s currency, peso, has lost 68% of its value, and coupled with annual inflation of over 50% and the fall of 2.5% of the GDP in 2018, the economy fell to a further 2.2% in 2019. However, its GDP is still promising, owing to its improved industries and other sectors (Peralta-Ramos, 2019). This paper discusses Argentina’s economy, which will cover the country’s biggest challenges, factors that affect the country’s economic development, and it’s vision. Moreover, the country’s challenges in the next five years, the main obstacles of growth to the country, and the root cause of the current economic situation.

Economic Overview of Argentina

As stated earlier, Argentina is an upper-income economy, which means it’s a strong economy. However, it faces the recent challenge of monetary policy ordered by the central bank, which results in high inflation levels when calculated based on fractional integration (Isoardi, 2019). The inflation results are the uncertainty of the future economy, considering it was a rapid inflation change, discourages investors, and a shortage of consumer goods. Starting from 2017, when the federal policy was implemented, an economic crisis increased the real value of debt and inflation.

Energy and agriculture contribute to the natural resources of Argentina. It has fertile lands, renewable emery, lithium, and gas reserves within its territory 2.8 million square kilometers. Besides, some manufacturing sub-sectors, as well as technological innovations from high tech industries, create significant opportunities for the country. However, due to its economic growth volatility and institutional obstacles, the country’s economic development has been negatively affected. Urban poverty remains high, standing at 35.5% and children poverty standing at 52.3% (Epele, 2016). The financial turbulence of 2018 implied economic plan revision and resulted in the signing program with the IMF, signed by President Macri, due to the disturbance’s effects. In 2018, the plan’s main objective was to stabilize public accounts to reach a primary fiscal balance projected to 2019. The economic situation gives an unstable equilibrium.

The county’s long-term vision is to increase its production, public investment, and employment, which will ensure that Argentina remains among the top agricultural producers and diversification of industries. Although bio-fuel levels may not be easily predicted, the county is capable of sustaining economic growth in the next five years. It occupies the best position to export raw materials and vanguard of the bio-based economy in the future. Despite a great bio-fuel based economy, it faces a problem of overcoming the oil economy, which has dominated the marketplace for over a century (Manduca, 2018).

Indeed, just like any other nation, Argentina has both the times of rising and falling in terms of economic development. Argentina’s economy is strong though it still faces some challenges that may hinder it from attaining its long-term vision. Agriculture is the main contribution to the economy, where it is one of the world’s leading agricultural producers. The country’s economy is uneven, and there are alternating periods of high economic growth followed closely by the recession. However, it has been able to get back to its feet due to the diversification of industries and other sectors contributing to its growth. The government has also played a role in affecting the country’s economy, such as President Macri signing a program with the IMF and partnership with the World Bank. The country’s future is promising, although the bio-fuels cannot be easily predicted, the state has the potential to be the leader of the bio-based economy in the future. The country also has to deal with the oil economy, which has dominated the marketplace for over a century.

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