1. Abhinav VK – 12P121 Karan Jaidka – 12P141
Mayur Srivastav– 12P151 Ravi Goel– 12P161
Soumyajit Sengupta– 12P171 Amrita Sandhu – 12FPM74
Group 2 – Section C

2. The Argentinian Economy
 The economy of Argentina is an upper middle-income economy, and
Latin America's third-largest. The nation has a high quality of life and
GDP per capita, which is since 2011 the highest in Latin America.
 The country benefits from rich natural resources, a highly literate
population, an export-oriented agricultural sector and a diversified
industrial base.
 Historically, however, Argentina's economic performance has been very
uneven, in which high economic growth alternated with severe
recessions.
 Early in the twentieth century it was one of the richest countries in the
world and the richest in the Southern Hemisphere, though it is now an
upper-middle income country.
 Argentina is considered an emerging market by the FTSE Global Equity
Index, and is one of the G-20 major economies.

3. GDP and its Growth Rates

4. The Argentinian GDP Story!
 In 1989, according to the convertibility plan the peso was pegged to the U.S.
dollar at a rate of 1:1
 The economy was liberalized by privatization of over 200 state owned
companies
 Due to cheap imports, many businesses closed down because they could not
compete with low costs of foreign products
 With the selling-off of state-run industries to the private market, thousands of
Argentines were left without work
 Simultaneously, the government went on a spending spree financed by debt
 By 1999, GDP had fallen 4% for the year

5. The Argentinian GDP Story! (Contd.)
 The tipping point came in November 2001, when there was an all out run on the banks
 Finance Minister Cavallo ordered a limit on bank withdrawals to 250 – 300 pesos per week
and these measures backfired horrendously on the government.
 In January 2002, the government decided to abandon the law of convertibility and set the
official exchange rate at 1 to 1.4.
 Devaluation made Argentina exports much more competitive and imports uncompetitive.
This led to a big increase in export demand
 The devaluation forced people to buy less imports and more domestically produced goods
which was good for Argentinian industry.
 Since the devaluation and debt default, Argentina has posted impressive rates of economic
growth.
 Annual % change in real GDP in 2000 was -0.8 which went up to 8.4 in 2007

6. Components of GDP (Expenditure
in billion USD)

7. Components of GDP
(Annual Growth Rate)

8. Sectoral Contribution to GDP

9. Sectoral Contribution to GDP
(Annual Growth %)

10. Sectoral Contribution Analysis
 Argentina is one of the world's major agricultural producers, ranking
among the top producers and, in most of the following, exporters of
beef, citrus fruit, grapes, honey, maize, sorghum, soybeans, squash,
sunflower seeds, wheat, and yerba mate.
 Agriculture accounted for 9% of GDP in 2010, and around one fifth of all
exports
 Fruits and vegetables made up 4% of exports
 Mining is a growing industry, increasing from 2% of GDP in 1980 to nearly
4% today
 Around 35 million m³ each of petroleum and petroleum fuels are
produced
 Manufacturing is the largest single sector in the nation's economy (19%
of GDP), and is well-integrated into Argentine agriculture, with half the
nation's industrial exports being agricultural in nature

11. Sectoral Contribution Analysis (Contd.)
 Leading sectors by production value are: Food processing and
beverages; motor vehicles and auto parts; refinery products, and
biodiesel; chemicals and pharmaceuticals; steel and aluminum
 The service sector is the largest contributor to total GDP, accounting
for over 60%. Argentina enjoys a diversified service sector, which
includes well-developed social, corporate, financial, insurance, real
estate, transport, communication services, and tourism.
 The telecommunications sector has been growing at a fast pace
 Business Process Outsourcing became the leading Argentine service
export, and reached US$3 billion
 The World Economic Forum estimated that, in 2008, tourism generated
around US$25 billion in economic turnover, and employed 1.8 million

12. Balance on Goods and Services

13. Government Consumption Expenditure

14. Break-Up of Public Finances

15. Household Consumption Expenditure

16. The Consumption Pattern
 Consumption had decreased in 2002 but the trend was reversed in 2003
partly in response to the rising inflation
 Salaries began to rise and by 2005 their consumption pattern returned
to pre recession period.
 The middle class returned to buying luxury products on account of
higher salaries
 The trend has carried on ever since and has proved good for the
economy

17. Gross Capital Formation
(Investment)

18. Trade Balance Graph (Goel to add)

19. Break-Up of Exports and Imports

20. Trade Balance Analysis
 Argentina’s trade surplus, as of May 2009, rose 139% from the 2008 levels to $2.48 billion due to a
sharp drop in imports, in the wake of the economic meltdown
 The overall exports dropped by 18% in May 2009 to $5.14 billion, while imports fell by 49% to $2.66
billion.
 The export slump was attributed to lower prices of grains and oilseeds. While the volume
increased 6%, export prices fell by 13%
 The imports plunged 39% in volume and 16% of value.
 Purchases of foreign made and capital goods shrank in May 2009
 The trade surplus in the first five months of 2009 was $8.33 billion, up by 63% from $5.12 billion in
the first five months of 2008.
 In January 2010, Argentina’s trade surplus reached $1.22 billion. While exports rose 19% to $4.42
billion in the month due to rising industrial manufacturing sales, imports rose by 16% at $3.21
billion.

21. ¡gracias