Demography and economic geography. – State of South America. The population is growing at a reduced rate (0.9% per year) compared to the past and less than the Latin American average: 40,117,096 residents at the 2010 census, 41,803,125 residents according to an estimate by UNDESA (United Nations Department of Economic and Social Affairs) of 2014. Life expectancy at birth is increasing, especially in the poorer social classes, and the number of young people under 15 is decreasing, while that between 15 and 24 years, an important reservoir of workforce, is expanding. The urbanization rate is among the highest in the world and around the capital Buenos Aires live a third of Argentines. The population, made up of the descendants of the great transoceanic migrations, is almost entirely of European origin, in particular Spanish and Italian. The indigenous minorities concentrated in the northern provinces and the growing number of immigrants from the more economically disadvantaged neighboring countries are exceptions.
Economic conditions. – According to educationvv.com, the economic-financial crisis, which had hit the Argentina starting from 2001, it had started a heavy phase of recession which was overcome thanks to the expansionary policies of the government. However, after almost a decade of positive trend (with growth rates above 8-9%), the trend of the economy has suffered a new sharp slowdown, recording low growth, poor competitiveness on international markets, overvaluation of the currency with consequent imbalances on the trade balance. Also in February 2013 the IMF (International Monetary Fund) censored the country on charges of altering GDP and inflation statistics. In 2013, the GDP experienced an increase of 2.9% (while for 2014 a contraction of 1.7% was estimated), inflation remained stable around 25%, domestic consumption recorded an increase by 4% and public spending by 7.4%. However, these advances would not compensate for the deterioration of the accounts: imports increased by 1.6%, exports contracted by 5.3%. The foreign debt also weighs heavily, with an exorbitant annual service (interest and repayment of the debt due), while to feed industry and consumption the Argentina would need foreign capital. Added to this is the fact that at the end of July 2014 the Argentina has run into a new default, a bankruptcy, however, not comparable to that of 2001 (see below: Economic and financial policy).
The most dynamic productive sectors remain agriculture (+ 10.6% in 2013) and fishing (+ 22.8%), followed by a diversified industrial sector that alternates positive periods with periods of crisis and an energy sector that suffers the trend of economic policy, subject to frequent and unpredictable variations. In this regard, the succession of privatizations and nationalizations involving the oil company Repsol YPF, ‘renationalized’ in May 2012. The recent discovery of important shale gasand shale oil fields could push new investments in the sector, also useful for revive the national economy.
Economic and financial policy. – After the serious crisis that hit the Argentina in the early years of the 21st century, successive governments implemented an active economic policy aimed at promoting economic development while respecting social equity. In particular, the Argentine authorities have pursued the primary budget surplus and the gradual reduction of public debt ensuring financial sustainability with the development of an adequate repayment capacity.
Evolution of the main economic aggregates
Fiscal policy was characterized by an increase in the tax burden, accompanied by more effective action to combat tax evasion and avoidance, and by the adoption of a more equitable tax system. Reductions in tax rates have been guaranteed to businesses in order to encourage employment and the emergence of non-regularized work, and other tax incentives have promoted investments in capital goods. To support social inclusion by protecting consumers’ purchasing power, the government has supported the increase in the minimum wage and pensions, lowered the prices of primary consumer goods and provided subsidies for public transport and household energy consumption.
In the field of trade policy, the authorities have introduced restrictions on foreign trade by imposing strict controls and non-tariff barriers to imports, in order to protect national strategic sectors, while exporters have been able to benefit from financing and subsidies. In the foreign exchange market, the government has curbed the use of foreign exchange reserves by residents by limiting their use in domestic commercial transactions. Important structural reforms were adopted in 2012 to contain the effects of the global financial crisis and support the internal market, including the nationalization of the oil company Repsol YPF. The reform of the central bank has made it possible to expand the instruments available to guarantee financial stability, employment and economic development. Additional measures have been taken in order to stimulate financial inclusion and facilitate access to bank credit. During this period, an expansionary monetary policy was carried out aimed mainly at buying foreign currency to increase the reserves necessary to manage the volatility of the peso, and in part to finance the public sector, thus fueling the inflationary spiral. In January 2014, to cope with the fall in foreign reserves and persistent tensions on the foreign exchange market, the Argentine peso was devalued, and the government launched a range of new economic policy actions: monetary policy was tightened with the increase in the interest rate and the access of Argentine savers to the foreign exchange market was made easier.
