Argentina

Economy

Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base.

Related Topics:
Natural resource - Literate - Agricultural - Industrial

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Since the late 1970s the country piled up public debt and was plagued by bouts of high inflation. In 1991, the government pegged the peso to the U. S. dollar and limited the growth in the monetary base. The government then embarked on a path of trade liberalisation, deregulation, and privatisation. Inflation dropped and GDP grew, but external economic shocks and failures of the system diluted its benefits, causing it to crumble in slow motion, from 1995 and up to the collapse in 2001.

Related Topics:
Inflation - Pegged - U. S. dollar - Monetary base - Trade liberalisation - Deregulation - Privatisation - GDP - Collapse in 2001

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By 2002 Argentina had defaulted on its debt, its GDP had shrunk, unemployment was over 18%, the peso had devalued 75% after being floated, and inflation was hitting again. However, careful spending control and heavy taxes on now soaring exports gave the state the tools to regain resources and conduct monetary policy.

Related Topics:
Default - Unemployment - Devalued - Floated - Tax - Monetary policy

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In 2003, import substitution policies and soaring exports, coupled with a lower inflation and expansive economic measures, triggered a surge in the GDP, which was repeated in 2004, creating jobs and encouraging internal consumption. Capital flight decreased, and foreign investment slowly returned. The influx of foreign currency from exports created such a huge trade surplus that the Central Bank was forced to buy dollars from the market, which it continues to do at the time, to be accumulated as reserves.

Related Topics:
Import substitution - Export - Capital flight - Foreign investment - Trade surplus - Reserves

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