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The Business Profile Of Argentina

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Introduction

Argentina has huge natural resources in energy and agriculture. It is one of the largest economy in Latin America They have a Gross Domestic Product (GDP) of $637.43 billion. The country is located in the southern half of South America. With an area of 2,780,400km, it is the eight largest country in the world and largest Spanish-Speaking country. Argentina is very well known around the world for their football team.

Argentina is now mainly focus on sustainable economic development. In this report I explain how is their economic condition, trade pattern and exchange rate trends.

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Economic Condition of Argentina

Argentina is the second largest country in the South America. It is one of the wealthiest country in the world for its fertile land, mineral resources, highly educated population etc. With an economic freedom score of 52.2 it is 148th freest in the world.

Urban poverty is a major problem for Argentina. They focus on social spending through different program to deal with the situation. They also working to deal with the macroeconomic imbalance. They are facing huge problem because of the depreciation of Argentine peso.

Argentina is one of the major agriculture producer in the world. It mainly produces grapes, honey, sunflower seeds, wheat, soybeans, maize, citrus fruits and squash. About 9% of total GDP is accounted for agriculture.

Argentina is also very famous for manufacturing industry. 15% of their total GDP is covered by manufacturing industry. Their main productions are pharmaceuticals, chemicals, auto parts, steel and aluminum, food processing, motor vehicles, biodiesel, and home appliance.

Service sector is the major contributor of total GDP. About 60% is accounted for service sector. Service sector includes real estate, insurance, tourism, financial and communication service. Though they have a trade deficit in service sector. Their tourism sector is increasing rapidly.

To deal with the economic problem Argentina take some strategy. They are creating job opportunity in agricultural sectors. They also make available asset for household and people. Also they took some steps to safeguard natural resources and decrease environmental risks.

Trading Patterns of Argentina

Argentinean export is increasing during the recent year. They are the 45th largest exporter in the world. In the last 10 years their export is increase and their main export product is natural resources. They have a deep trading relation with higher GDP country such as America and European country. Their exports of total GDP is 11.18% and imports of total GDP is 13.84%.

Argentina’s total export is $58,384,194,969 and total import is $66,899,299,586 in 2017. Their trade of balance is ($8,515,104,617). Argentina mainly export their product to Brazil, United States, China, Chile, Vietnam, India, Spain, Algeria, Netherland, Canada. Their major export products are Animal Feeds, Cereals, Motor Vehicle parts, Fat oils, Oil Seeds, Seafood, Chemical Products, Meat, Oil and Mineral fuels.

Argentina’s major import countries are Brazil, China, United States, Germany, Mexico, Italy, Spain, France, Thailand and Bolivia. Their major import products are Motor Vehicles & Parts, Industrial Machinery, Electrical Machinery, Oil & Mineral Fuels, Plastics, Pharmaceuticals, Chemicals, Precision Instruments, Chemical Products and Iron & Steel.

Exchange Rate Trends of Argentina

Argentina’s currency unit is Argentine Peso (ARS). Peso was introduced and is referred to by the international market as the Peso Convertible in 1992. Central Bank of Argentina and the US introduce fixed exchange rate at a rate of $1=ARS1. But the agreement expired in 2001. After that the exchange rate has been fluctuating.

The current USDARS rate is 43.93. It decreases 0.04% from 43.94 in June 17. Currently ARS facing high rate. Their all-time high was 45.81 in April of 2019 and it was recorded all-time low of 0.98 in January 1992.

From 2010 to 2018 the exchange rate doesn’t change much. But after 2018 it increases a lot. That mean ARS is weakening against the USD.

From the historical exchange rate trend, we can see that ARS is getting weaker against USD. So from this trend we can predict that it will be continue. According to Trading Economics analysis ARS is expected to trade at 45.88 in the coming quarter and after 12 months it will be 48.84.

Conclusion

Argentina has a high rich natural resources and they have an export oriented agricultural sector. This provides a huge impact to improve the economic condition of Argentina. But during the 20th century they are facing economic crises, persistent fiscal and current account deficits, high inflation, mounting external debt, and capital flight. Their new president Macri has been taken some steps to solve these problem. He removed capital control and export control that helps the economy to overcome the problem.

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