Argentinabenefits from rich natural resources, a highly literate population, an export-oriented agricultural sector and a diversified industrial base. Historically, however, Argentina's economic performance has been very uneven, in which high economic growth alternated with severe recessions, particularly during the late twentieth century. Early in the twentieth century it was one of the richest countries in the world and the richest in the Southern hemisphere, though it is now an upper-middle income country. Argentina is considered an emerging economy by the FTSE Global Equity Index, and is one of the G-20 major economies.
Agriculture in Argentina and Mining in Argentina
View of pampas soy fields. Though Argentina is now an industrial and service economy, agriculture still earns more than half the foreign exchange.
Argentina is one of the world's major agricultural producers, ranking among the top producers and, in most of the following, exporters of citrus fruit, grapes, honey, maize, sorghum, soybeans, squash, sunflower seeds, wheat, and yerba mate. Agriculture accounted for 7.5% of GDP in 2009, and nearly one fifth of all exports (not including processed food and feed, which are another third). Soy and its byproducts, mainly animal feed and vegetable oils, are major export commodities at 24% of the total. Wheat, maize, sorghum and other cereals totaled 8%.Cattle-raising is also a major industry, though mostly for domestic consumption; beef, leather and dairy were 5% of total exports. Sheep-raising and wool are important in Patagonia, though these activities have declined by half since 1990.
Fruits and vegetables made up 4% of exports: apples and pears in the Río Negro valley; rice, oranges and other citrus in the northwest and Mesopotamia; grapes and strawberries in Cuyo (the west), and berries in the far south. Cotton and tobacco are major crops in the Gran Chaco, sugarcane and chile peppers in the northwest, and olives and garlic in the west. Yerba mate tea (Misiones), tomatoes (Salta) and peaches (Mendoza) are grown for domestic consumption. Argentina is the world's fifth-largest wine producer, and fine wine production has taken major leaps in quality. A growing export, total viticulture potential is far from having been met. Mendoza is the largest wine region, followed by San Juan.
Government police towards the lucrative agrarian sector is a subject of, at times, contentious debate in Argentina. A grain embargo by farmers protesting an increase in export taxes for their products began in March 2008, and, following a series of failed negotiations, strikes and lockouts largely subsided only with the July 16 defeat of the export tax-hike in the Senate.
Argentine fisheries bring in about a million tons of catch annually, and are centered around Argentine hake which makes up 50% of the catch, pollack, squid and centolla crab. Forestry has long history in every Argentine region, apart from the pampas, accounting for almost 14 million m³ of roundwood harvests.Eucalyptus, pine, and elm (for cellulose) are all widely harvested, mainly for domestic furniture, as well as paper products (1.5 million tons). Fisheries and logging each account for 2% of exports.
Around 35 million m³ each of petroleum and petroleum fuels are produced, as well as 50 billion m³ of natural gas, making the nation self-sufficient in these staples, and generating around 10% of exports. The most important oil fields lie in Patagonia and Cuyo. A network of pipelines (next to Mexico's, the second-longest in Latin America) send raw product to Bahía Blanca, center of the petrochemical industry, and to the La Plata-Buenos Aires-Rosario industrial belt.
Mining is a growing industry, increasing from 2% of GDP in 1980 to around 4% today. The northwest and San Juan Province are the main regions of activity. Coal is mined in Santa Cruz Province. Metals mined include copper, zinc, magnesium, sulfur, tungsten, uranium silver, and particularly, gold, whose production was boosted by recent investments from Barrick Gold in San Juan. Metal ore exports soared from US$ 200 million in 1996 to US$1.2 billion in 2004, and to over US$ 2 billion in 2007.
Tandanor shipyard, Buenos Aires
Petrochemical complex in Bahía Blanca
Manufacturing is the nation's largest single sector in the economy with 21% of GDP, and is well-integrated into Argentine agriculture, accounting for nearly two-thirds of exports in all, with half the nation's industrial exports being agricultural in nature.Leading sectors by production value are: food processing, chemicals and pharmaceuticals, motor vehicles, farming equipment and auto parts, iron, steel and aluminum, petroleum, as well as industrial machinery and home appliances. These latter include over three million big ticket items, as well as an array of electronics, kitchen appliances and cellular phones, among others. Beverages are another significant sector, and Argentina has long been among the top five wine producing countries in the world, though in 2000, beer overtook wine production, and today leads by nearly two billion liters a year to one.
Other manufactured goods include textiles and leather, plastics and tires, forestry products, publishing, cement, glass and tobacco products. Nearly half the industries are based in and around Buenos Aires, although Córdoba, Rosario, and Ushuaia are also significant industrial centers. Construction permits nationwide covered nearly 19 million m² (200 million ft²) in 2006. the construction sector accounts for 6% of GDP, and two-thirds of the construction was for residential buildings.
Argentina produces electricity in large part through well developed natural gas and hydroelectric resources. Nuclear energy is also of high importance, and the country is one of the largest producers and exporters, alongside Canada and Russia of cobalt-60, a radioactive isotope widely used in cancer therapy.
The service sector is the biggest contributor to total GDP, accounting for over 60%. Argentina enjoys a diversified service sector, which includes well-developed social, corporate, financial, insurance, real estate, transport, communication services, and tourism.
The telecommunications sector has been growing at a fast pace, and the economy benefits from widespread access to mobile telephony (more than 75% of the population having access to mobile phones), Internet (more than 16 million people online), and broadband services. Regular telephone services with 9.5 million lines and mail services are robust.
Tourism is increasingly important and provided 8% of economic output (over US$25 billion) in 2008. Argentines, who have long been active travelers within their own country, accounted for over 80%, although an increasing number of international tourists (4.6 million visited Argentina in 2007) contributed US$4.3 billion that year. Stagnant for over two decades, domestic travel increased strongly in the last few years, and visitors are flocking to a country seen as affordable, exceptionally diverse, and safe.
Argentine banking, whose deposits exceeded US$70 billion in February 2010,developed around public sector banks, but is now dominated by the private sector. The private sector banks account for most of the 85 active institutions (4,000 branches) and holds nearly 60% of deposits and loans, and there are as many foreign-owned banks as local ones. The largest bank in Argentina by far, however, has long been the public Banco de la Nación Argentina. Not to be confused with the Central Bank, this institution now accounts for about a fourth of the total deposits and a seventh of its loan portfolio.
During the 1990s, Argentina's financial system was consolidated and strengthened. Deposits grew from less than US$15 billion in 1991 to over US$80 billion in 2000, while outstanding credit (70% of it to the private sector) tripled to nearly US$100 billion.
The banks largely lent US dollars and took deposits in Argentine pesos, and when the peso lost most of its value in early 2002, many borrowers again found themselves hard pressed to keep up. Delinquencies tripled to about 37%. Over a fifth of deposits had been withdrawn by December 2001, when Economy Minister Domingo Cavallo imposed a near freeze on cash withdrawals. The lifting of the restriction a year later was bittersweet, being greeted calmly, if with some umbrage, at not having these funds freed at their full U.S. dollar value.Some fared worse, as owners of the now-defunct Velox Bank defrauded their clients of up to US$800 million.
Credit in Argentina is still relatively tight. Lending to the private sector has been increasing 40% a year since 2004, and deliquencies are down to 3%. Still, credit outstanding is, in real terms, about a fifth less than in 2000, and as a percent of GDP (less than 20%), quite low by international standards. The prime rate, which had hovered around 10% in the 1990s, hit 67% in 2002. Although it returned to normal levels quickly, inflation, and more recently, global instability have been affecting it again. The prime rate was over 20% for much of 2009, and 17% in the first half of 2010.
Partly a function of this and past instability, Argentines have historically held more deposits overseas than domestically. The estimated US$140 billion in overseas accounts and investment exceeded the domestic monetary base (M3) by nearly 50% in 2009.
Main article: Foreign trade of Argentina
Argentine exports are fairly well diversified. However, although agricultural raw materials were only 15% of the total exports in 2009, agricultural goods including processed foods still account for 50% of exports. Soy products alone (soybeans, vegetable oil) account for almost one fourth of the total. Cereals, mostly maize and wheat, which were Argentina's leading export during much of the twentieth century, make up less than one tenth now.
Argentine exports since 1991, in billions of US dollars.
Industrial goods today account for a third of Argentine exports. The country exported over 322,000 motor vehicles in 2009, mostly to Brazil. Motor vehicles and auto parts are the leading industrial export, about 10% of the industrial exports. Chemicals, steel, aluminum, machinery, and plastics account for most of the remaining industrial exports.
A net energy importer until 1981, Argentina's fuel exports began increasing rapidly in the early 1990s and today account for about an eighth of the total. Refined fuels make up about half. Exports of crude petroleum and natural gas have recently been about around US$3 billion a year.
Argentine imports have historically been dominated by the need for industrial and technological supplies, machinery, and parts, which altogether amounted to US$29 billion in 2009, three-fourths of the total imports. Consumer goods including motor vehicles make up most of the rest. Trade in services, historically in deficit for Argentina, is currently balanced at around US$12 billion each way.
Direct investment in Argentina by the U.S. is mainly in telecommunications, energy, financial services, chemicals, food processing, and vehicle manufacturing. The U.S. direct investment in Argentina approached $16 billion at the end of 1999, according to the embassy estimates. Investments from Canada, Europe, Chile, and other countries have also been significant. In all, foreign nationals hold around US$80 billion in direct investment.
The recycled docklands at Puerto Madero are among the developments attracting foreign as well as local investment.
Brazil has, since 2000, also became an important investor in Argentine assets and Spanish companies in particular have entered the Argentine market aggressively, with major investments in the petroleum and gas, telecommunications, banking, and retail sectors. Several bilateral agreements play an important role in promoting U.S. private investment. Argentina has an Overseas Private Investment Corporation (OPIC) agreement and an active program with the U.S. Export-Import Bank. Under the 1994 U.S.-Argentina Bilateral Investment Treaty, U.S. investors enjoy national treatment in all sectors except shipbuilding, fishing, nuclear-power generation, and uranium production. The treaty allows for international arbitration of investment disputes.
Argentina attracted $3.4 billion in foreign direct investment (FDI) in 2006; as a percent of GDP, this FDI volume was below the Latin American average. Current Kirchner Administration policies and difficulty in enforcing contractual obligations had been blamed for this modest performance.A considerable improvement was recorded in 2007, however, when foreign nationals invested US$6.3 billion, and in 2009, despite an adverse international climate, around US$5 billion.
Production and other statistics
A collector's 1951 Justicialist. This was the first car wholly designed and manufactured in Argentina.
Argentine harvests of grains and oilseeds, 1992-2007, in millions of metric tons.
Yacyretá hydroelectric dam in northeastern Argentina. Hydropower has helped Argentina lessen its dependency on fossil fuels.
View of the Argentine grain belt in the Province of Buenos Aires.
Investment (domestic, physical): US$64 billion, 20.6% of GDP (2009)
Household income or consumption by percentage share:
lowest 10%: 1.2%
highest 10%: 35.2%
Motor vehicles: 9.5 million active registrations (one per 4.2 people)
Agriculture - products (metric tons, 2008): soy (46.2 M), maize (21.3 M), sugarcane (20.5 M), wheat (16.3 M), sunflower seeds (4.6 M), citrus fruit (3.2 M), sorghum (2.9 M), grapes (2.8 M), potatoes (2.6 M), barley (1.5 M), apples (1.2 M), rice (1.2 M), green tea and yerba mate (1.1 M).
Meats: beef, 3.4 M; poultry, 1.5 M; seafood 0.7 M; pork, 0.3 M.
Distribution by sector (2007): food, beverages and tobacco, 20.4%; chemicals and pharmaceuticals, 15.6%; machinery and equipment, 14.1%; motor vehicles, 12.1%; steel and aluminum, 9.1%; refined petroleum, 8.8%; construction material, 4.6%; rubber and plastics, 4.1%; paper and cardboard, 3.2%; textiles and leather, 2.1%; publishing, furniture and other, 5.9%.
Main article: Electric power in Argentina
production: 116.1 TWh
consumption: 109.1 TWh (2008)
exports: 5.1 TWh
imports: 7.4 TWh (2006)
Electricity - production by source:
natural gas: 54.2%
other fossil fuel: 11.5%
other renewables: 1.3% (2007)
production: 675,000 barrels/day
consumption: 564,000 barrels/day
exports: 111,000 barrels/day (2006)
proved reserves: 2.6 billion barrels (2008)
refined petroleum: 35.2 milliom m³ (2008)
production: 50.4 billion m³ (including LNG)
consumption: 43.4 billion m³ (2008)
exports: 2.6 billion m³
imports: 1.9 billion m³ (2007)
proved reserves: 446 billion m³ (2008)
Argentina: Historical Economic Growth Rates.
1900 to 1913 5.7% 1.7%
1913 to 1929 3.6% 1.0%
1929 to 1945 1.2% -0.6%
1945 to 1974 4.0% 2.3%
1974 to 1990 -0.4% -1.8%
1990 to 2009 4.0% 2.9%
Reserves of foreign exchange & gold: December 2006: US$31 billion, May 2007: US$40 billion, March 2008: US$50 billion. January 2009: US$47 billion May 2010: US$49 billion