Subchapters:
- Basic data
- Public finances and the state budget
- Banking system
- Tax System
Basic data
Argentina is one of the largest economies in Latin America, with a gross domestic product (GDP) of approximately US$450 billion. The country has huge reserves of mineral resources and fertile agricultural land. Imports mainly include industrial products. The main trading partners are Brazil, the EU, China, the United States and Paraguay. Check ebizdir for economical facts of Argentina.
State intervention and constant changes in economic policy prevent more extensive development of the country. The economy’s ability to generate new jobs is weak. Most Argentine companies produce goods with medium or low added value, and GDP per capita thus consistently lags behind countries that have at least partially managed to reorient themselves to goods or services with higher added value (e.g. Chile, but partly also Brazil). Industrial production is strongly dependent on the situation in Brazil, especially the automotive industry.
In connection with the outbreak of the coronavirus pandemic, one of the longest and strictest quarantines in the world was introduced in Argentina. It hit the Argentine economy particularly hard. GDP fell by almost 10% in 2020. In Argentina, due to the recession it has been suffering since 2018, negative macroeconomic features are accumulating. In addition to high inflation, whose annual rate exceeded 50% in 2021 and is still one of the highest in the world, the country has to contend with a falling domestic currency and a strict foreign trade regime. Argentina remains in dire need of foreign investment and an influx of modern technology.
The economy is still very closed to the rest of the world (perhaps with the exception of the MERCOSUR countries) and the dependence on agricultural crops makes it extremely vulnerable. Argentina’s economic situation is reflected in the everyday life of its citizens. Already 43% of Argentines are below the poverty line, child poverty reaches an unprecedented 63%.
| Pointer | 2019 | 2020 | 2021 | 2022 | 2023 |
| GDP growth (%) | -2.1 | -9.7 | 10.2 | 3 | 2.6 |
| GDP/population (USD/PPP) | 21,680.00 | 19,590.00 | 22,070.00 | 23,480.00 | 24,480.0 |
| Inflation (%) | 53.6 | 42 | 50.9 | 51.8 | 37 |
| Unemployment (%) | 9.8 | 11.6 | 9 | 8.7 | 8.1 |
| Export of goods (billion USD) | 65.1 | 54.6 | 77.9 | 79.5 | 82.9 |
| Import of goods (billion USD) | 49.1 | 44.1 | 63.2 | 67.9 | 71.6 |
| Trade Balance (Billion USD) | 18.2 | 14.6 | 18.2 | 15.4 | 15.2 |
| Industrial production (% change) | -6.2 | -16.1 | 14.5 | 2.8 | 2.4 |
| Population (millions) | 44.8 | 45.2 | 45.6 | 46 | 46.4 |
| Competitiveness | 61/63 | 63/63 | 63/64 | ON | ON |
| OECD export risk | 07.VII | 07.VII | 07.VII | ON | ON |
Source: EIU, OECD, IMD
Public finance and state budget
| Public finance | 2021 |
| State budget balance (% of GDP) | -4 |
| Public debt (% of GDP) | 88.7 |
| Current account balance (billion USD) | 7 |
| Taxes | 2022 |
| AFTER | 25-30% |
| F.O | 5-31% |
| VAT | 21% |
Argentina’s public debt reaches almost 400 billion USD, which represents about 109% of GDP. In 2020, a portion of USD 66 billion was restructured (in relation to private creditors), and in 2022 an agreement was reached with the International Monetary Fund to postpone installments in the amount of approximately USD 44 billion.
Restrictions on foreign capital (loans) result in a very slow recovery from a deep recession.
Banking system
Argentina’s banking system has always been at the center of economic problems that have befallen Argentina in the past. In the recent past, Argentine depositors have lost their savings several times or their deposits have depreciated significantly. Today, therefore, the state of the banking sector is one of the most watched economic indicators. In recent years, stability has been gradually increasing.
The banking system in Argentina is made up of the central bank, 13 public and 50 private banks. In recent years, a large number of digital banks, virtual wallets and other Fintech companies have sprung up, which are also regulated by the central bank.
The key trend is pressure on the Argentine peso. Low confidence, adverse macroeconomic factors and uncertain future prospects result in currency devaluation. It has already reached such an intensity that the Argentine government must artificially maintain the value of the peso so that the already high inflation does not deepen. All interstate business transactions must be approved by the central bank, which further exacerbates the unavailability of many foreign products.
According to the size of assets, the largest financial institutions in the country are:
1. NACION ARGENTINA
2. BANCO GALICIA SAU
3. MACRO SA
4. SANTANDER RIO
5. BANCO BBVA ARGE
6. BANCO PROVINCIA BUENOS AIRES
7. CITIBANK NA
8. CREDICOOP COOP
9. HSBC BANK
Tax system
Argentina has one of the most complicated tax systems in the world. In 2019, the Argentine institute IARAF conducted a tax study and counted a total of 163 (!) types of taxes (national, provincial, local or other). The tax system has historically been characterized by great instability, as large public expenditures and fiscal deficits lead to the need to borrow, and in the event of unexpected events, the government often has to resort to raising taxes to raise revenue. Argentina is one of the countries with the highest tax rates in the region, at the expense of the investment environment. As one of the few countries in the world, it also uses export duties.
Basic taxes at the federal level
Profit and income tax (25-30% for entrepreneurs and between 5 and 31% for individuals depending on the amount of income)
Property tax (varies according to the amount of property, but is roughly 0.9-%)
Value added tax (mostly 21%)
Bank transfer tax – 0.3%
Asset tax inside and outside Argentina – 1% (can be offset against profit tax)
Import and export duties (0-35 %), e.g. a 35% duty is applied to cars.
