Argentina counts with large and diversified agriculture and industry sectors, which, together, account for about 30 percent of the national GDP and 28 percent of the employment. Across its 2.8 million square kilometers of territory, Argentina is privileged with access to vast natural resources. This natural richness has allowed the country to develop major industries in automobile, agriculture, textiles, and mining. Nevertheless, this has also made the country develop high levels of commodity dependence, like most of its South American neighbors, and is therefore vulnerable to international economic shocks and commodity price fluctuations.
A country rich in natural resources
Considered as an agricultural giant, the South American nation is one of the world's leading producers and exporters of soy, beef, corn, yerba mate, and wheat, amongst other products. Visibly, agriculture is one of the pillars of Argentina’s exports, as reflected in the volume of trade and diversity of its trade partners, ranging from neighboring country Brazil to Algeria, or the Asian superpower, China. In 2020 alone, Argentina exported approximately 2.2 billion U.S. dollars’ worth of soybean, one of the country’s main commodities. Argentina ranks as one of the leading soybean producing and exporting countries worldwide. However, while allowing for great economic profits, this shift towards extractivism and agribusiness has negative social and environmental consequences. For instance, the so-called “sojization” of Argentina’s agriculture has resulted in soil degradation, expansion of monocultures, replacement of food crops, displacement of farmers and indigenous people, and deforestation.Argentina's abundant natural resources means it has great potential in the renewable energy sector as well, which it has yet to explore. Despite the fall in biofuel production experienced since 2017, it remains as one of the major biofuel producers worldwide, only surpassed by Brazil in the Latin American region. Moreover, the manufacturing sector — the largest industry in Argentina — while diversified, is also closely linked to this richness in natural resources, as food processing (of soybean oil, sunflower oil, wine, etc.) has a paramount role in the sector.
Inflation and public debt, the main challenges
Over the past decades, inflation — even hyperinflation in the late 80s — and public debt have become chronic issues in the South American nation. The economic stagnation, or even recession, experienced in recent years has not contributed to alleviating the situation. The government has resorted on several occasions to printing money in order to cover its fiscal deficit, especially given its temporary loss of access to international credit markets. This has only served to further boost inflation, which exceeded 40 percent since the beginning of 2021, even surpassing 100 percent in the first eight months of 2023. The sectors most affected by recent price increases have been restaurants and hotels and food and non-alcoholic beverages.The country’s inability to manage its finances has led to a long history of loans and defaults. The corralito, three sovereign defaults, massive debt restructurings, and the largest bailout of the IMF’s history are some of the country’s economic milestones in the 21st century. Since joining the IMF in 1956, Argentina has received over 20 financial-support programs from the institution. In 2021, even though the nation still owed 40 billion dollars to the IMF from the 2018 bailout, it took another 44 billion dollar loan, which added to the already substantial external debt. On the bright side, there seems to be some improvements: as of 2021, the national debt in relation to the Argentine GDP decreased to 80.6 percent, the lowest level since 2017, and so did the size of the government’s debt hold in foreign currency.
