International Trade in Argentina

News Related to International Trade in Argentina

Business outline for Argentina

Main Industry Sectors

Having lost the position of a superpower it occupied at the beginning of the 20th century, Argentina remains an important world economy, namely due to its agricultural production. The agricultural sector, which is based livestock farming, cultivation of cereals (wheat, corn, soy) and citrus fruit, represents around 10% of the country's GDP.

Rich in energy resources, Argentina is the world's fourth largest oil producer and first largest natural gas producer in Latin America.

The industry sector has vastly expanded over these last few years. It contributes to more than one third of the GDP. Food packaging (in particular meat packing, flour grinding, and canning) and flour-milling are the country's main industries.

The services sector followed the same trend as the industry sector. Today, it contributes to more than half of the GDP. Argentina has specialized in areas of high-tech services and offers excellent value for money specifically in software development, call centers and nuclear energy.

Economic Overview

After the severe recession, which lead to the Argentinian bankruptcy in 2001-2002, the economy saw a rapid and stable growth, before being hit by the global financial crisis. In 2009 the economy contracted sharply as an effect of the fall in demand (0.9% of growth) but in 2010 it experienced a quick and vigorous recovery, together with the rest of the South-American continent. The 2010 growth, estimated at 7.5% and driven by household consumption, public spending good performance of the agricultural sector and dynamic trade with Brazil, should nevertheless slow down in 2011.

In the context of the coming 2011 elections, the government of Cristina Fernandez de Kirchner is likely to continue the expansionist policy to stimulate domestic demand. Controlling the increasing inflantion also remains a priority. In addition, the Argentinian economy is suffering from structural faults: the financial system remains fragile and the country needs to deal with an energy crisis dues to lack of investment in this sector since 2004.

The social situation of the country is sensitive: unemployment and malnutrition persist, with
25% of the population living under the poverty line.

FDI in Figures

FDI influx into Argentina which were growing steadily since 2004 halved in 2009 as an effect of the global economic recession. They should continue their recovery which began in 2010.  Argentina ranks 4th amongst the South American countries that attract the most FDI flow (after Colombia, Brazil and Chile). The three main investors in Argentina are the United States, Spain and France.  Argentina's poor ranking in this classification is due the disastrous image conveyed by the country during the economic crisis which affected its economy between the end of 90s and the beginning of 2000. Nevertheless, Argentina has clear strenghts: its natural resources are considerable (copper, gas and oil) and its workforce is highly-skilled and competitive.

FDI Government Measures

The government has established various measures to encourage foreign investment in the form of incentives to invest in capital goods and infrastructures, financing programs, capacity promotion (employment and quality amongst others), encouraging innovation and technological development, geographic incentives and sectorial investments.
For further information, consult the ProsperAr website.

Country Strong Points

A wealth of raw materials, good level of education, a human development indicator noticeably above the Latin American average, and strong growth for several years now.

Country Weak Points

The banking sector is fragile and under-capitalized; investments in energy are insufficient and inflation is high.

Foreign Trade Overview

Argentina is very open to international exchanges, foreign trade represening around 45% of the GDP. Its main commercial partners are the Mercosul countries (Brazil, Paraguay and Uruguay), China and the United States. Argentina exports more than it imports and its trade balance is therefore in surplus.The devaluation of the peso has boosted Argentina's exports (especially of agricultural products). However, the increased rate of the Argentinian peso compared to the American dollar risks damaging the competitiveness of Argentina's exports which would cause the balance of trade to deteriorate.