Argentina flag Argentina: Economic outline

Economic Outline

Economic Indicators

Argentina has a long history of political and economic instability - with significant growth fluctuations every year. After growing 5% in 2022, the country entered a recession in 2023, with GDP contracting an estimated 2.5% amid shrinking household consumption and a devasting drought that reduced agricultural exports. Elevated inflation, fiscal consolidation efforts, and stringent financial circumstances will exert pressure on consumption throughout 2024, compounded by subdued confidence levels and heightened political uncertainty which will persistently impede investment. While the IMF expects growth to pick up to 2.8% this year, the OECD forecasts a further contraction of 1.3%. A gradual improvement is anticipated for 2025 as the macroeconomic environment strengthens and exports regain momentum.

The new government led by Milei, who took office in December 2023, faces the imperative task of consolidating public finances to stabilize the economy. A recently unveiled fiscal support initiative integrates a mix of worker subsidies, expanded income tax exemptions, and credit relief measures aimed at shielding households from soaring inflation. However, this temporary fiscal expansion is poised to exacerbate the strain on public finances, already affected by dwindling export tax revenues. The IMF estimated the fiscal deficit at 3.2% of GDP last year, with a reduction foreseen in 2024 (to 2.8%). Argentina's gross public debt rose to 89.5% of GDP in 2023 and is predominantly owed to domestic creditors, with a split of 64% domestic and 36% external. The primary creditors include local public sector agencies, accounting for 46% of the total, followed by the private sector, which includes both local entities and non-residents, holding 35% of the total debt. Multilateral and bilateral organizations constitute the remaining 19%. Approximately 33% of the total public debt is denominated in local currency, with a significant portion indexed to the USD or inflation. Inflation has surpassed 120% in 2023 - the highest inflation rate since the 1991 hyperinflation era - and may continue to rise in the near term due to expectations of a currency devaluation.

Despite challenges, the labour market remains resilient, with unemployment standing at 7.4% in 2023, although it increased compared to the previous year (6.8% - IMF). Nonetheless, informality has surged, nearing 40% of the labour force (OECD). The IMF expects the unemployment rate to remain relatively stable over the forecast horizon. The Argentine government has faced difficulties in fighting high levels of poverty, which affects more than 40% of the population, and the social situation of the country is characterised by constant underlying tensions between the Government and trade unions over the reforms announced. The country is also split between central and decentralised authorities over the distribution of federal revenues.

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 630.66654.89604.26558.96592.49
GDP (Constant Prices, Annual % Change) 5.0-1.6-
GDP per Capita (USD) 13,64014,02412,81211,73412,315
General Government Balance (in % of GDP) -4.3-
General Government Gross Debt (in % of GDP) 84.7154.586.279.569.5
Inflation Rate (%) 72.4133.5249.859.631.8
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) -4.29-22.705.505.015.91
Current Account (in % of GDP) -0.7-

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Argentine Peso (ARS) - Average Annual Exchange Rate For 1 GBP 19.9321.3237.4860.1390.43

Source: World Bank, 2015


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Latest Update: June 2024

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