With a Gross Domestic Product (GDP) of approximately US$640 billion, Argentina is one of the largest economies in Latin America.
Argentina has vast natural resources in energy and agriculture. Within its 2.8 million square kilometers territory, Argentina is endowed with extraordinary fertile lands, gas, and lithium reserves, and has great potential for renewable energy. The country is a leading food producer with large-scale agricultural and livestock industries. In addition, Argentina has significant opportunities in some manufacturing subsectors, and in innovative services in high tech industries.
The economy contracted by 1.6 percent in 2023, due to persistent macroeconomic imbalances and a severe drought that led to a 26 percent decline in agricultural production from previous year.
Argentina began a process of stabilizing its macroeconomy in 2024. Real GDP is estimated to contract by 3.5 percent in 2024, due to the stabilization plan that includes the realignment of relative prices and the elimination of fiscal and external imbalances. The economy is expected to grow by 5 percent in 2025, driven by improved weather conditions, investments in the energy sector, and normalization of agricultural production.
The stabilization program has achieved good initial results on the fiscal front and on inflation. Between January and September 2024, Argentina ran a fiscal surplus for the first time in many years. Country risk has also fallen, from 2,100 points in January to 1,280 in October 2024. However, it remains one of the highest in the region.
Likewise, inflation, which continues to be high, managed to decrease from a monthly maximum of 25.5 percent in December 2023 to 4.2 percent in August 2024. To cushion the poor. the government implemented social protection measures that included increases in social benefits for the most vulnerable (universal child allowance and food benefits) above inflation.
Argentina is under a 30-months Extended Fund Facility (EFF) with the International Monetary Fund (IMF). In June 2024, the IMF Executive Board completed the eighth review of the program. In line with the government’s new program, the EFF is focused on implementing a sound fiscal consolidation plan with the objective of achieving a primary surplus of 2 percent of GDP by 2024. This fiscal consolidation plan, coupled with a supportive monetary stance to combat inflation and simplification of the foreign exchange (FX) regime, is expected to result in an accumulation of approximately $10 billion in net international reserves by end of 2024.
Last Updated: Oct 03, 2024
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Publish date : 2023-09-20 10:18:00
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