Natural resources that stimulate the economy
Argentina's economy is underpinned by its agricultural strength, which accounts for 10.7% of GDP. Argentina is a major producer of meat, wool, wine and fish products. Soaring prices for agricultural products are a key factor in getting the entire economy back on its feet. Soya, destined for Asian consumers and biofuels, is the new goldmine for Argentine farmers, who have made their country the world's3rd largest soya producer, behind the United States and Brazil, alas with the heavy use of glyphosate and deforestation. A country rich in energy resources, it ranks first in Latin American gas production, fourth in oil and third in electricity. This last resource is essentially based on thermal and hydroelectric production. The country also has a number of gold, silver, copper, lead, zinc, iron, tin, tungsten, mica, uranium and salt mines. The industrial sector is booming, accounting for over a third of GDP. Automobiles, textiles, food packaging, flour mills, rubber, cement and paper are the country's main industries. The tertiary sector has followed the same trend as industry. Today, it accounts for 66% of GDP. The tertiary sector is growing steadily, particularly in high-tech services such as software development, call centers, nuclear power, tourism and, more recently, biotechnology.
A fragile territory with coveted resources
Today, a precious resource is attracting covetousness: lithium. If Argentina has the advantage of covering a huge territory, it also seems to be on borrowed time, as the abundance of its natural resources attracts national and foreign companies. With global energy demand on the rise, the country has proven to be a market of prime importance. For several decades, northern Patagonia has been riddled with gas and oil wells. Along the way, Argentina has become the largest producer of natural gas in Latin America with 37.1 km3 in 2017. Its natural wealth has been diverted by various economic policies and has almost caused harm: during the 2001 crisis, the Argentine government even considered the possibility of ceding Patagonia to the United States in exchange for the cancellation of the enormous debt contracted with the International Monetary Fund! Massive pollution, exploitation of the soil and ecological disasters, the landscapes are gradually being disfigured by the world's largest companies that have come to settle in the region in recent decades. Between hydroelectric dam projects, cut down national parks and mining, all the big companies are present: Total, YPF, Tecpetrol, Chevron, Exxon... And despite the intervention of various associations and NGOs, denouncing a disregard for environmental rules and indigenous peoples' rights, the oil industry operates without any control. Thus, in the huge exploitation of the shale gas deposit of Vaca Muerta, in the province of Neuquén, Greenpeace has already alerted on the dysfunctions of this platform opened in 2010 on Mapuche territory. The government has already received two warnings from the UN, but unfortunately the environmental decrees are being modified to benefit the companies.
Political and social issues
Since 2018, Argentina has been going through a deep economic crisis, yet managed to secure the biggest loan in IMF history: $57 billion! Barely two months after obtaining IMF aid, Buenos Aires is worried: the peso has lost half its value since January 2019 and continues to fall. Bringing forward the IMF funds, which was already foreseen in all the calculations, will not change the situation; the confidence that the international markets gave the government has partly disappeared: the markets are now demanding results. Argentina has defaulted on its debts, failing to repay the IMF on time and running up a huge debt (88% of GDP). Today, the state coffers are empty, inflation has exceeded 100% in one year, and one in two Argentines lives below the poverty line. The IMF confirms that it is impossible to repay their debt. A veritable economic and political pendulum, Argentina cannot seem to get out of the crisis it has been going through for over twenty years. On December 10, 2019, neo-liberal President Mauricio Macri was defeated at the polls, handing over to Alberto Fernández, the new center-left president with 47% of the vote. In recession for over a year, with inflation running at over 37%, Argentina is witnessing the return of Peronism. Faced with a catastrophic economic situation and a social policy in shambles, Alberto Fernández's objectives were ambitious. But the economic crisis worsened, with poverty affecting over 40% of the population and inflation reaching 150% by the end of his mandate. Very unpopular in the polls, he is not standing for re-election. He was succeeded by Javier Milei, an ultraliberal economist, who won the elections with 55.5% of the vote. Seeking "shock therapy" to revive his country, he adopted major fiscal austerity measures, such as devaluing the peso by more than 50% and cutting many subsidies. One year after coming to power, despite rising poverty and unemployment, the results have been positive, with the first budget surplus since 2008 and the lowest inflation rate since 2021 (2.7%). However, Javier Milei still faces a number of challenges if he is to extricate Argentina from this crisis, which has now become permanent. Has the IMF lent Argentina too much? Two conditions are necessary for a way out of the crisis: obtain a new maturity by renegotiating the interest cost of the debt, and reform public spending to release funds to repay the debt.
Place du tourisme
Of course, Covid-19 and tourism don't mix very well. In June 2020, the winter sports resort of San Carlos de Bariloche, the most famous in South America, closed its doors while the streets of Buenos Aires remained empty and silent. Hard hit by the pandemic, Argentina's tourism sector lost millions of dollars, which did little to stem the economic crisis. And yet, in recent years, the country has seen record numbers of tourists: 4 million foreign tourists in 2006, 5.8 million in 2011, over 6 million in 2015 and 7.4 million in 2019. Before the Covid-19 epidemic, Argentina was beating its record for tourist numbers. In 2017, the country recorded an annual increase of 5.7%, and the National Tourism Institute predicted that international tourist arrivals would double by 2020... Thanks to an increasingly favorable exchange rate (the peso crisis is a real boon for tourists) and undeniable tourist assets, Argentina is the most visited country by foreigners in Latin America. In 2014, tourism was already worth $8.5 billion. Brazilians and Chileans make up the bulk of these visitors at over 60%, with Europeans and North Americans making up just 15% of the total. In 2019, Buenos Aires welcomed 2 million visitors, including 67,200 from France. This influx of foreign tourists is prompting a readaptation of the city's infrastructure and hotel offer, which in turn is encouraging Argentines themselves to discover their own country and the magnificent riches it abounds in. After closing its borders for two long years during the health crisis, Argentina reopened them in April 2022, receiving 1.5 million tourists in the second quarter. With 6.7 million visitors in 2023, tourism in Argentina is gradually returning to pre-Covid levels.
