Economy

Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. The country historically had a large middle class compared to other Latin American countries, but this segment of the population was decimated by a succession of economic crises. Today, while a significant segment of the population is still financially well-off, they stand in sharp contrast with millions who have seen their purchasing power drastically reduced. Since 2002, there has been an improvement in the situation of the poorer sectors and a strong rebound of the middle class.

Since the late 1970s, the country piled up public debt and was plagued by bouts of high inflation. In 1991, the government pegged the peso to the US dollar and limited the growth in the monetary base. The government then embarked on a path of trade liberalization, deregulation and privatisation. Inflation dropped and the gross domestic product grew, but external economic shocks and failures of the system diluted its benefits, causing it to crumble in slow motion, from 1995 and up to the collapse in 2001.

By 2002, Argentina had defaulted on its debt, its GDP had shrunk, unemployment was more than 25% and the peso had depreciated 75% after being devalued and floated. However, careful spending control and heavy taxes on now-soaring exports gave the state the tools to regain resources and conduct monetary policy.

In 2003, import substitution policies and soaring exports coupled with lower inflation and expansive economic measures, triggered a surge in the GDP. It was repeated in 2004 and 2005, creating millions of jobs and encouraging internal consumption. Capital flight decreased, and foreign investment slowly returned. The influx of foreign currency from exports created a huge trade surplus. The Central Bank was forced to buy dollars from the market, and continues to do so at various times today to be accumulated as reserves. It does this to prevent the Argentine peso from appreciating significantly and cutting competitiveness.

The situation by 2006 was further improved. The year was on track to match the large GDP growth of the last three (predictions are between 8.5% and 9.0%), though inflation, estimated at around 10 to 12%, has become an issue again, and income distribution is still considerably unequal. In a variety of reports, internationals organisations criticised Argentina for remaining a somewhat closed economy.

In 2002, 57.5% of the population was below the poverty line, but the last report in August 2006 showed a 31.4% poverty level. Similarly, unemployment was more than 25%, by July 2006 it was 10.2% . GDP per capita has surpassed the previous pre-recession peak of 1998 in PPP, but still lags in nominal GDP, mostly due to an undervalued currency. The economy grew 8.9% in 2003, 9.0% in 2004, and 9.2% in 2005. As of 2006 foreign debt stands at 68% of GDP and was slowly decreasing.

Agriculture

In 2004, agricultural output accounted for 11% of GDP, and one third of all exports. Soy and vegetable oils are major export commodities at 24% of exports. Wheat, maize, oats, sorghum and sunflower seeds totalled 8%. Cattle is also a major industry. Beef, milk, leather products and cheese were 6% of total exports. Sheep and wool industries are important in Patagonia, pigs and caprines elsewhere.

Fruits and vegetables made up 3% of exports: apples and pears in the Río Negro valley; oranges and other citrus in the northwest and Mesopotamia; grapes and strawberries in Cuyo, and berries in the far south. Cotton and yerba mate are major crops in the Gran Chaco, sugarcane and tobacco in the northwest, and olives and garlic in Cuyo. Bananas (Formosa), tomatoes (Salta), and peaches (Mendoza) are grown for domestic consumption. Argentina is the world's fifth-largest wine producer, and fine wine production has taken major leaps in quality. A growing export, total viticulture potential is far from met. Mendoza is the largest wine region, followed by San Juan.

Forestry has expanded in Mesopotamia; elm for cellulose, pine and eucalyptus for furniture, timber and paper products. Both sectors account for 2% of exports each.

Manufacturing

Manufacturing is the nation's leading single sector in GDP output, with 35% of the share. Leading sectors are motor vehicles, auto parts, and transportation and farming equipment (7% of exports), iron and steel (3%), foodstuffs and textiles (2%). Other manufactures include cement, industrial chemicals, home appliances, and processed wood. The biggest industrial centres are Buenos Aires, Rosario and Córdoba.

Mining

Mining is a rising industry. The northwest and San Juan Province are main regions of activity. Metals mined include gold, silver, zinc, magnesium, copper, sulphur, tungsten and uranium. In only ten years exports soared from US$ 200 million to 1.2 billion in 2004, 3% of total.. Estimates for 2006 are US$ 2bn, a 10 fold rise from 1996.

Oil and Gas

Industrial petrochemicals, oil and natural gas are Argentina's second group of exports, 20% of totals. The most important oil fields lie in Patagonia and Cuyo. An impressive network of pipelines send raw product to Bahia Blanca, centre of the petrochemical industry, and to the La Plata-Rosario industrial belt. Coal is also mined.

Service Sector

The service sector is the biggest contributor to total GDP. Argentina produces energy in large part through well developed hydroelectric resources; nuclear energy is also of high importance. The country is one of the largest producers and exporters (with Canada and Russia) of Cobalt-60, a radioactive isotope widely used in cancer therapy. Telecommunications are extremely strong, with an important penetration of mobile telephony (75% of population) and Internet (30%), broadband services (3%) are expanding rapidly. Regular telephone (85% of households) and mail are robust. Construction has led employment creation in the current economic expansion, and is 5% of GDP.

Tourism

Tourism is increasingly important, now providing 7% of economic output. Argentines are travelling more within their borders, and foreign arrivals are flocking to a country seen as affordable, safe and incredibly diverse: 3.7 million tourists visited in 2005.

Transportation

Argentina's highway system is well-developed and paved roads reach all corners of the country. There are nearly 640,000 kilometres of highways and roads. Multilane highways now connect several main cities and more are now under construction.

The railway network was one of the largest in the world, at over 40,000 kilometres of tracks. After decades of decaying service and lack of maintenance, most passenger services shut down in 1992 when the rail company was privatised, and thousands of kilometres of track are now in disrepair. Currently, railway services are being reactivated between several cities.

The country has around 3,000 kilometres of waterways, most significant among these the Río de la Plata, Paraná, Uruguay, and Paraguay rivers.