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94-466: Economy of Argentina Argentine peso Convertibility plan Corralito Corralón Cacerolazo 2001 riots Apagón Economic emergency law Debt restructuring The 1998–2002 Argentine great depression was an economic depression in Argentina , which began in the third quarter of 1998 and lasted until the second quarter of 2002. It followed fifteen years of stagnation and

188-507: A balance of payments crisis that plagued Argentina with severe stagflation from 1975 to 1990, including a bout of hyperinflation in 1989 and 1990. Attempting to remedy this situation, economist Domingo Cavallo pegged the peso to the U.S. dollar in 1991 and limited the money supply's growth. His team then embarked on a path of trade liberalization , deregulation , and privatization . Inflation dropped to single digits, and GDP grew by one third in four years. External economic shocks and

282-605: A bank run . On 2 December, the government enacted measures, informally known as the corralito , which allowed for only minor sums of cash to be withdrawn, initially $ 250 a week. The freeze enraged many Argentines who took to the streets of important cities, especially Buenos Aires. They engaged in protests that became known as cacerolazo (banging pots and pans). The cacerolazos began as noisy demonstrations but soon included property destruction, often directed at banks, foreign-owned privatized companies, and, especially, big American and European companies. Confrontations between

376-556: A brief period of free-market reforms . The depression, which began after the Russian and Brazilian financial crises , caused widespread unemployment, riots , the fall of the government, a default on the country's foreign debt, the rise of alternative currencies and the end of the peso 's fixed exchange rate to the US dollar . The economy shrank by 28 per cent from 1998 to 2002. In terms of income, over 50 per cent of Argentines lived below

470-413: A chronic problem during this period, averaging 26% annually from 1944 to 1974. The GDP per capita increased until the early 1950s, where commodity prices dropped and the effects of nationalization led to stagnation. The economy continued to decline during the military dictatorship from 1976 to 1983 and for some time afterward. The dictatorship's chief economist, José Alfredo Martínez de Hoz , advanced

564-402: A controversial, neoliberal policy of financial liberalization that increased the debt burden and failed to curb inflation, which reached 344% in 1983. While black markets and shortages disappeared as price and exchange controls were removed, the currency devalued tenfold and the economy failed to grow. Record foreign debt interest payments , tax evasion , and capital flight resulted in

658-694: A cut of 15000 state jobs. Argentina's 2023 annual inflation was the highest in the world at 211.4%. In January 2024, Argentina’s poverty rate reached 57.4%, the highest poverty rate in the country since 2004. The following table shows the main economic indicators in 1980–2023 (with IMF staff estimates in 2024–2028). Inflation below 5% is in green. (in bn. US$ PPP) (in US$ PPP) (in bn. US$ nominal) (in US$ nominal) (real) (in Percent) (in Percent) (in % of GDP) Argentina

752-402: A dependency on volatile short-term capital and debt to maintain the overvalued fixed exchange rate diluted benefits, causing erratic economic growth from 1995 and the eventual collapse in 2001 . That year and the next, the economy suffered its sharpest decline since 1930; by 2002, Argentina had defaulted on its debt. Its GDP had declined by nearly 20% in four years, unemployment reached 25%, and

846-433: A diversified industrial base. Argentina benefits from rich natural resources . However, its economic performance has historically been very uneven, with high economic growth alternating with severe recessions, particularly since the late twentieth century. Income maldistribution and poverty have increased since this period. Early in the twentieth century, Argentina had one of the ten highest per capita GDP levels globally. It

940-477: A few months, the exchange rate was mostly a floating exchange rate . The peso further depreciated, which prompted increased inflation. Argentina depended heavily on imports but then could not replace them locally. Inflation and unemployment worsened during 2002. Then, exchange rate had reached nearly 4 pesos per dollar, and the accumulated inflation since the devaluation was about 80%, considerably less than predicted by most orthodox economists. The quality of life of

1034-611: A helicopter on 21 December. Following the presidential succession procedures established in the Constitution of Argentina , the Senate chairman was next in the line of succession in the absence of the president and the vice-president. Accordingly, Ramón Puerta took office as a caretaker head of state , and the Legislative Assembly (a joint session of both chambers of Congress) was convened. Adolfo Rodríguez Saá ,

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1128-457: A major buyer of Argentina's soy products. The government encouraged import substitution and accessible credit for businesses, staged an aggressive plan to improve tax collection, and allocated large sums for social welfare but controlled expenditure in other fields. The peso slowly rose, reaching a 3-to-1 rate to the dollar. Agricultural exports grew and tourism returned. The huge trade surplus ultimately caused such an inflow of dollars that

1222-432: A means of payment was quite uneven. It was hoped that convertibility would restore public confidence, and the non-convertible nature of this currency would allow for a measure of fiscal flexibility (unthinkable with pesos) to ameliorate the crippling recession. Critics called the plan merely a "controlled devaluation" but its advocates countered that since controlling a devaluation is perhaps its thorniest issue, that criticism

1316-581: A monthly rate of about 20 per cent in April 2002. In contrast, Hong Kong was able to successfully defend its currency board arrangement during the Asian financial crisis, a major stress test for the arrangement. Although there is no clear consensus on the causes of the Argentine crisis, there are at least three factors that are related to the collapse of the currency board system and ensuing economic crisis: While

1410-544: A number of important firms privatized during the 1990s were renationalized beginning in 2003. These include the postal service , ASA (the water utility serving Buenos Aires ), Pension funds (transferred to ANSES ), Aerolíneas Argentinas , the energy firm YPF , and the railways . The economy nearly doubled from 2002 to 2011, growing an average of 7.1% annually and around 9% for five consecutive years between 2003 and 2007. Real wages rose by around 72% from their low point in 2003 to 2013. The global recession did affect

1504-561: A prominent advocate of dollarization , and members of the board of directors had overlooked money laundering within Argentina's financial system. Clearstream was accused of being instrumental in this process. Other Latin American countries, including Mexico and Brazil (both important trade partners for Argentina) faced economic crises of their own, leading to mistrust of the regional economy. The influx of foreign currency provided by

1598-434: A respected economist with centrist views, showed a considerable aptitude at managing the crisis, with the help of heterodox measures. The economic outlook was completely different from that of the 1990s. The devalued peso made Argentine exports cheap and competitive abroad and discouraged imports. In addition, the high price of soybeans in the international market produced massive amounts of foreign currency; China became

1692-447: A second debt restructuring in 2010 brought the percentage of bonds out of default to 93%, though holdout lawsuits led by vulture funds remained ongoing. Bondholders who participated in the restructuring have been paid punctually and have seen the value of their bonds rise. Argentina repaid its International Monetary Fund loans in full in 2006, but had a long dispute with the 7% of bond-holders left. In April 2016 Argentina came out of

1786-418: A somewhat larger number to Argentina); Argentina's domestic new auto market reached a record 964,000 in 2013. This marked a peak in vehicle production, by 2021 production had fallen to 434,753 vehicles. Vehicles remain Argentina's top export to Brazil, accounting for $ 3.1bil in exports in 2021. Beverages are another significant sector, and Argentina has long been among the top five wine producing countries in

1880-404: A swap: longer-term, higher-interest bonds would be exchanged for bonds due in 2010. The "megaswap" ( megacanje ), as Cavallo referred to it, was accepted by most bondholders, and it delayed up to $ 30 billion in payments that would have been due by 2005; but it also added $ 38 billion in interest payments in the out years; of the $ 82 billion in bonds that eventually had to be restructured (triggering

1974-554: A wave of holdout lawsuits), 60% were issued during the 2001 megaswap. Cavallo also attempted to curb the budget crisis by instituting an unpopular across-the-board pay cut in July of up to 13% to all civil servants and an equivalent cut to government pension benefits, De la Rúa's seventh austerity round—triggering nationwide strikes, and from August, it paid salaries of the highest-paid employees in IOUs instead of money. That further depressed

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2068-465: Is based on GDP-linked bonds , and investors, both foreign and domestic, netted record yields amid renewed growth. Argentine debt restructuring offers in 2005 and 2010 resumed payments on the majority of its almost US$ 100 billion in defaulted bonds and other debt from 2001. Holdouts controlling 7% of the bonds, including some small investors, hedge funds , and vulture funds led by Paul Singer's Cayman Islands -based NML Capital Limited , rejected

2162-544: Is considered an emerging market by the FTSE Global Equity Index (2018), and one of the G-20 major economies . In 2021, MSCI re-classified Argentina as a standalone market due to prolonged severe capital controls. Before the 1880s, Argentina was a relatively isolated backwater, dependent on the salted meat , wool , leather, and hide industries for both the more significant part of its foreign exchange and

2256-427: Is growing in Argentina, and the nearly 3 million hectares (7.5 million acres) of organic cultivation is second only to Australia . 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 having been met. Mendoza is the largest wine region, followed by San Juan . Government policy towards

2350-611: Is one of the world's major agricultural producers, ranking among the top producers 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 (not including processed food and feed, which are another third). Commercial harvests reached 103 million tons in 2010, of which over 54 million were oilseeds (mainly soy and sunflower ), and over 46 million were cereals (mainly maize, wheat, and sorghum ). Argentina

2444-535: Is the highest in the world, since the national currency had lost 18% of its value since the beginning of the year. In 2019, the inflation was considered the highest in 28 years according to the index, ascending to 53.8%. To the cause of the quarantine in 2020, in April, 143,000 SMEs will not be able to pay salaries and fixed expenses for the month, even with government assistance, so they will have to borrow or increase their capital contribution, and approximately 35,000 companies consider closing their business. even so,

2538-423: Is the largest producer in the world of yerba mate , one of the 5 largest producers in the world of soy , maize , sunflower seed , lemon and pear , one of the 10 largest producers in the world of barley , grape , artichoke , tobacco and cotton , and one of the 15 largest producers in the world of wheat , sugarcane , sorghum and grapefruit . In 2018, Argentina was the 3rd largest producer of soy in

2632-632: The Roca–Runciman Treaty . Benefiting from innovative self-financing and government loans alike, value-added in manufacturing nevertheless surpassed that of agriculture for the first time in 1943, employed over 1 million by 1947, and allowed the need for imported consumer goods to decline from 40% of the total to 10% by 1950. The populist administration of Juan Perón nationalized the Central Bank , railways , and other strategic industries and services from 1945 to 1955. Inflation first became

2726-608: The Río Negro valley; rice, oranges and other citrus in the northwest and Mesopotamia ; grapes and strawberries in Cuyo (the west), and berries in the far south. Cotton and tobacco are major crops in the Gran Chaco , sugarcane and chile peppers in the northwest, and olives and garlic in the west. Yerba mate tea ( Misiones ), tomatoes ( Salta ) and peaches (Mendoza) are grown for domestic consumption. Organic farming

2820-560: The US Treasury , which would lend to the government below market rates if it complied with conditions. Several more rounds of belt-tightening followed. José Luis Machinea resigned in March 2001. He was replaced with Ricardo López Murphy , who lasted less than three weeks in office before being replaced with Cavallo. Standard and Poor's cut the credit rating of the country's bonds to B− in July 2001. Cavallo reacted by offering bondholders

2914-427: The peso argentino at a rate of ₳1 = $ a 1,000, making the austral worth US$ 1.25, or 80 centavos de austral per U.S. dollar. In 1992, the austral was itself replaced by the convertible peso at a rate of $ 1 = ₳10,000. In 1985, coins were introduced for 1 ⁄ 2 , 1, 5, 10 and 50 centavos. The 1 ⁄ 2 ¢ was only issued in 1985, whilst production of the 1¢ ceased in 1987, 5¢ ceased in 1988, and that of

1998–2002 Argentine great depression - Misplaced Pages Continue

3008-469: The petrochemical industry , and to the La Plata - Greater Buenos Aires - Rosario industrial belt. The World Bank lists the top producing countries each year, based on the total value of production. According to the 2019 list, Argentina has the 31st most valuable industry in the world (57.7 billion dollars), behind Mexico, Brazil and Venezuela, but ahead of Colombia, Peru and Chile. In 2019, Argentina

3102-512: The privatization of state companies had ended. After 1999, Argentine exports were harmed by the devaluation of the Brazilian real against the dollar. A considerable international revaluation of the dollar directly weakened the peso relative to Argentina's trading partners: Brazil (30% of total trade flows) and the eurozone (23% of total trade flows). After having grown by over 50% from 1990 to 1998, Argentina's GDP declined by 3% in 1999 and

3196-425: The 2005 and 2010 offer to exchange their defaulted bonds. Singer, who demanded US$ 832 million for Argentine bonds purchased for US$ 49 million in the secondary market in 2008, attempted to seize Argentine government assets abroad and sued to stop payments from Argentina to the 93% who had accepted the earlier swaps despite the steep discount . According to estimates by Morgan Stanley, bondholders who instead accepted

3290-550: The 2005 offer of 30 cents on the dollar had by 2012 received returns of about 90%. Argentina settled with virtually all holdouts in February 2016 at the cost of US$ 9.3 billion; NML received US$ 2.4 billion, a 392% return on the original value of the bonds. While the Argentine Government considers debt leftover from illegitimate governments unconstitutional odious debt , it has continued servicing this debt despite

3384-492: The 4th world producer of beef , with a production of 3 million tons (only behind USA, Brazil and China), the 4th world producer of honey , the 10th world producer of wool , the world's 13th largest producer of chicken meat , the world's 23rd largest producer of pork , the 18th largest producer of cow's milk and the world's 14th largest producer of chicken egg . Soy and its byproducts, mainly animal feed and vegetable oils , are major export raw materials with one fourth of

3478-486: The Alfonsin administration, unemployment did not substantially increase, but real wages fell by almost half to the lowest level in fifty years. Prices for state-run utilities, telephone service, and gas increased substantially. Confidence in the plan, however, collapsed in late 1987, and inflation, which had already averaged 10% per month (220% per year) from 1975 to 1988, spiraled out of control. Inflation reached 200% for

3572-494: The Argentine peso, however, shows that even a currency board arrangement cannot be completely safe from a possible collapse. When the peso was first linked to the U.S. Dollar at parity in February 1991 under the Convertibility Law, initial economic effects were quite positive: Argentina's chronic inflation was curtailed dramatically and foreign investment began to pour in, leading to an economic boom. Over time, however,

3666-548: The IMF in January ;2006  ( 2006-01 ) ). The downside of this reserve accumulation strategy is that US dollars had to be bought with freshly issued pesos, which risked inflation. The Central Bank sterilized its purchases by buying Treasury letters. In this way the exchange rate stabilised to about 3:1. The currency exchange issue was complicated by two opposing factors: a sharp increase in imports since 2004, which raised

3760-499: The IMF refused to release a US$ 1.3 billion tranche of its loan, citing the failure of the Argentine government to reach its budget deficit targets, and it demanded budget cuts, 10% of the federal budget. On 4 December, Argentine bond yields stood at 34% over U.S. treasury bonds, and, by 11 December, the spread jumped to 42%. By the end of November 2001, people began withdrawing large sums of dollars from their bank accounts , turning pesos into dollars, and sending them abroad, which caused

3854-479: The United States average to about 80% during that period. Growth then slowed considerably, such that by 1941 Argentina's real per capita GDP was roughly half that of the U.S. Even so, from 1890 to 1950, the country's per capita income was similar to that of Western Europe; although income in Argentina remained considerably less evenly distributed. According to a study by Baten and Pelger and Twrdek (2009), where

1998–2002 Argentine great depression - Misplaced Pages Continue

3948-444: The annual cost of around US$ 14 billion and despite being nearly locked out of international credit markets with annual bond issues since 2002 averaging less than US$ 2 billion (which precludes most debt rollover ). Nevertheless, Argentina has continued to hold successful bond issues, as the country's stock market, consumer confidence, and overall economy continue to grow. The country's successful, US$ 16.5 billion bond sale in April 2016

4042-446: The authors compare anthropometric values, i.e., height with real wages, Argentina's GDP increased for the decades after 1870. Before 1910 however, the heights have been left unaffected. This, in turn, suggests that the increase in the population's welfare did not occur during the income expansion of the given period. The Great Depression caused Argentine GDP to fall by a fourth between 1929 and 1932. Having recovered its lost ground by

4136-488: The average Argentine was lowered proportionally. Many businesses closed or went bankrupt, many imported products became virtually inaccessible, and salaries were left as they were before the crisis. Since the supply of pesos did not meet the demand for cash (even after the devaluation), complementary currencies kept circulating alongside them. Fears of hyperinflation as a consequence of devaluation quickly eroded their attractiveness. Their acceptability now ultimately depended on

4230-614: The catch; pollock , squid , and centolla crab are also widely harvested. Forestry has long history in every Argentine region, apart from the pampas , accounting for almost 14 million m³ of roundwood harvests. Eucalyptus , pine , and elm (for cellulose ) are also grown, mainly for domestic furniture, as well as paper products (1.5 million tons). Fisheries and logging each account for 2% of exports. Mining and other extractive activities, such as gas and petroleum, are growing industries, increasing from 2% of GDP in 1980 to around 4% today. The northwest and San Juan Province are

4324-412: The country entered what became a three-year-long recession . President Fernando de la Rúa was elected in 1999 on a reform platform that nevertheless sought to maintain the peso's parity with the dollar. He inherited a country with high unemployment (15%), lingering recession, and continued high levels of borrowing. In 1999, economic stability became economic stagnation (even deflation at times), and

4418-529: The currency crisis is over, the debt problem has not been completely resolved. The government of Argentina ceased all debt payments in December 2001 in the wake of persistent recession and rising social and political unrest. In 2004, the Argentine government made a 'final' offer amounting to a 75 per cent reduction in the net present value of the debt. Foreign bondholders rejected this offer and asked for an improved offer. In early 2005, bondholders finally agreed to

4512-464: The default when the new government decided to repay the country's debt, paying the full amount to the vulture/hedge funds. Argentina's many years of military dictatorship (alternating with weak, short-lived democratic governments) had already caused significant economic problems prior to the 2001 crisis, particularly during the self-styled National Reorganization Process in power from 1976 to 1983. A right-wing executive, José Alfredo Martínez de Hoz ,

4606-443: The demand for dollars, and the return of foreign investment, which brought fresh currency from abroad, after the successful restructuring of about three-quarters of the external debt. The government set up controls and restrictions aimed at keeping short-term speculative investment from destabilising financial markets. The country faced a potential debt crisis in late July 2014, when a New York judge ordered Argentina to pay hedge funds

4700-443: The economic measures taken did nothing to avert it. The government continued its predecessor's economic policies. Devaluing the peso by abandoning the exchange peg was considered political suicide and a recipe for economic disaster. By the end of the century, complementary currencies had emerged. While the provinces of Argentina had always issued complementary currency in the form of bonds and drafts to manage shortages of cash,

4794-513: The economy in 2009, with growth slowing to nearly zero; but high economic growth then resumed, and GDP expanded by around 9% in both 2010 and 2011. Foreign exchange controls , austerity measures , persistent inflation, and downturns in Brazil, Europe, and other important trade partners, contributed to slower growth beginning in 2012, however. Growth averaged just 1.3% from 2012 to 2014, and rose to 2.4% in 2015. The Argentine government bond market

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4888-479: The election of President Raúl Alfonsín . The new government intended to stabilize the economy and in 1985 introduced austerity measures and a new currency, the Argentine austral , the first of its kind without peso in its name. Fresh loans were required to service the $ 5 billion in annual interest charges, however, and when commodity prices collapsed in 1986, the state became unable to service this debt. During

4982-725: The end of De la Rúa's term. Rodríguez Saá's economic team came up with a scheme designed to preserve the convertibility regime, dubbed the "Third Currency" Plan. It consisted of creating a new, non-convertible currency, the Argentino , that would coexist with convertible pesos and US dollars. It would circulate as cash, or but not in checks, promissory notes, or other instruments, which could be denominated in pesos or dollars. It would be partially guaranteed with federally managed land to counterbalance inflationary tendencies. Argentines having legal status would be used to redeem all complementary currency already in circulation; their acceptance as

5076-421: The end of the military government in 1983, the foreign debt had ballooned from $ 8 billion to $ 45 billion, interest charges alone exceeded trade surpluses, industrial production had fallen by 20%, real wages had lost 36% of their purchasing power, and unemployment, calculated at 18% (though official figures claimed 5%), was at its highest point since the 1929 Great Depression . Democracy was restored in 1983 with

5170-452: The end of the year. The Legislative Assembly convened again, appointing Peronist Senator Eduardo Duhalde of Buenos Aires Province , who had been the runner-up in the 1999 race for the presidency. In January 2002, after much deliberation, Duhalde abandoned the fixed exchange rate that had been in place for ten years. In a matter of days, the peso lost a large part of its value in the unregulated market. A provisional "official" exchange rate

5264-669: The first half of the 20th century, industrial production has become highly diversified in Argentina. Leading sectors by production value are: food processing and beverages ; motor vehicles and auto parts ; refinery products , and biodiesel ; chemicals and pharmaceuticals ; steel and aluminium ; and industrial and farm machinery ; electronics and home appliances . These latter include over three million big ticket items , as well as an array of electronics, kitchen appliances and cellular phones, among others. Argentina's auto industry produced 791,000 motor vehicles in 2013, and exported 433,000 (mainly to Brazil, which in turn exported

5358-503: The full interest on bonds it had swapped at a discount rate during 2002. If the judgement proceeded, Argentina argued, the country would become insolvent and have a second debt default. Economy of Argentina The economy of Argentina is the second-largest national economy in South America , behind Brazil . Argentina is a developing country with a highly literate population, an export-oriented agricultural sector , and

5452-574: The generation of domestic income and profits. The Argentine economy began to experience swift growth after 1880 through the export of livestock and grain raw materials, and British and French investment, marking the beginning of a fifty-year era of significant economic expansion and mass European immigration . From 1880 to 1905, this expansion resulted in a 7.5-fold growth in GDP during its most vigorous period, averaging about 8% annually. One important measure of development, GDP per capita, rose from 35% of

5546-534: The government to freeze spending and cut retirement benefits again. In early November, Standard & Poor's placed Argentina on a credit watch, and a treasury bill auction required paying 16% interest (up from 9% in July, the second-highest rate of any country in South America at the time. Rising bond yields forced the country to turn to major international lenders, such as the IMF, the World Bank , and

5640-400: The government was forced to begin intervening to keep the peso from rising further, which would have adversely affected budget balances by limiting export tax revenues and discouraged further reindustrialisation. The central bank started rebuilding its dollar reserves. By December 2005, foreign currency reserves had reached $ 28 billion (they were later reduced by the payment of the full debt to

5734-460: The governor of San Luis Province , was eventually appointed as the new interim president. During the last week of 2001, the administration defaulted on the larger part of the public debt, US$ 132 billion, a seventh of all the money borrowed by the Third World . Politically, the most heated debate involved the date of the following elections. Proposals ranged from March 2002 to October 2003,

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5828-455: The late 1930s partly through import substitution , the economy continued to grow modestly during World War II (contrary to the recession caused by the previous world war). The war led to reduced availability of imports and higher prices for Argentine exports that combined to create a US$ 1.6 billion cumulative surplus, a third of which was blocked as inconvertible deposits in the Bank of England by

5922-554: The levels as excessive, the IMF advised the government to balance its budget by implementing austerity measures to sustain investor confidence. The De la Rúa administration implemented $ 1.4 billion in cuts in its first weeks in office in late 1999. In June 2000, with unemployment at 14% and projections of 3.5% GDP for the year, austerity was furthered by $ 938 million in spending cuts and $ 2 billion in tax increases. GDP growth projections proved to be overly optimistic (instead of growing, real GDP shrank 0.8%), and lagging tax receipts prompted

6016-545: The lucrative agrarian sector is a subject of, at times, contentious debate in Argentina. A grain embargo by farmers protesting an increase in export taxes for their products began in March 2008, and, following a series of failed negotiations, strikes and lockouts largely subsided only with the 16 July, defeat of the export tax-hike in the Senate . Argentine fisheries bring in about a million tons of catch annually, and are centered on Argentine hake , which makes up 50% of

6110-768: The main regions of activity. Coal is mined in Santa Cruz Province . Metals and minerals mined include borate , copper , lead , magnesium , sulfur , tungsten , uranium , zinc , silver , titanium , and gold , whose production was boosted after 1997 by the Bajo de la Alumbrera mine in Catamarca Province and Barrick Gold investments a decade later in San Juan. Metal ore exports soared from US$ 200 million in 1996 to US$ 1.2 billion in 2004, and to over US$ 3 billion in 2010. In 2019, Argentina

6204-606: The month in July 1989, peaking at 5000% for the year. Amid riots , Alfonsín resigned five months before the end of his term; Carlos Menem took office in July. After a second bout of hyperinflation , Domingo Cavallo was appointed Minister of the Economy in January 1991. On 1 April, he fixed the value of the austral at 10,000 per US dollar . Australs could be freely converted to dollars at banks. The Central Bank of Argentina had to keep its US dollar foreign-exchange reserves at

6298-490: The official poverty line and 25 per cent were indigent (their basic needs were unmet); seven out of ten Argentine children were poor at the depth of the crisis in 2002. By the first half of 2003, GDP growth had returned, surprising economists and the business media, and the economy grew by an average of 9% for five years. Argentina's GDP exceeded pre-crisis levels by 2005, and Argentine debt restructuring that year resulted in resumed payments on most of its defaulted bonds;

6392-480: The other centavo coins ended in 1989. In 1989, ₳1, ₳5 and ₳10 coins were issued, followed in 1990 and 1991 by ₳100, ₳500 and ₳1,000 denominations. In 1985, provisional issues were made consisting of $ a1000, $ a5000 and $ a10,000 notes overstamped with the values ₳1, ₳5 and ₳10. Between 1985 and 1991, the following notes were issued by the Banco Central: All banknotes except the provisional types show on

6486-445: The peso appreciated against the majority of currencies as the U.S. Dollar became increasingly stronger in the second half of the 1990s. A strong peso hurt exports from Argentina and caused a protracted economic downturn that eventually led to the abandonment of the peso-dollar parity in 2002. This change, in turn, caused severe economic and political distress in the country. The unemployment rate rose above 20 per cent and inflation reached

6580-414: The peso had depreciated 70% after being devalued and floated . Argentina's socio-economic situation has since been steadily improving. Expansionary policies and raw materials exports triggered a rebound in GDP from 2003 onward. This trend has been primarily maintained, creating over five million jobs and encouraging domestic consumption and fixed investment . Social programs were strengthened, and

6674-524: The police and citizens became common, and fires were set on Buenos Aires avenues. De la Rúa declared a state of emergency , but the situation worsened, precipitating the violent protests of 20 and 21 December 2001 in Plaza de Mayo , where clashes between demonstrators and the police ended up with several people dead and precipitated the fall of the government. De la Rúa eventually fled the Casa Rosada in

6768-651: The president remains firm in his decision to maintain the state of total quarantine. Despite cuts in the payment chain, some project 180 total days and calculate 5% of companies that fell in May. In February 2023, the rate of inflation in Argentina surpassed 100% for the first time since the early 1990s. In December 2023, Argentina was seeing a projected 200% annualized inflation rate of the Argentine Peso. With this inflation in mind, Javier Milei (Argentina's newly sworn in president as of 10 December 2023, with 55.69% of

6862-505: The restructuring, under which they took a cut of about 70 per cent on the value of their bond holdings. When a short boom in the early 1990s of portfolio investment from abroad ended in 1995, Argentina became reliant on the IMF to provide the country with low-interest access to credit and to guide its economic reforms. When the recession began in 1999, the national deficit widened to 2.5% of GDP, and its external debt surpassed 50% of GDP. Seeing

6956-470: The same level as the cash in circulation . The initial aim of such measures was to ensure the acceptance of domestic currency because after the 1989 and 1990 hyperinflation, Argentines had started to demand payment in US dollars. This regime was later modified by a law ( Ley de Convertibilidad ) that restored the Argentine peso as the national currency. The convertibility law reduced inflation sharply, preserving

7050-464: The scale of such borrowing reached unprecedented levels during this period. They became called "quasi-currencies", the strongest of them being Buenos Aires 's Patacón . The national government issued its own quasi-currency, the LECOP . In a 2001 interview, journalist Peter Katel identified three factors that converged "the worst possible time" that made the Argentine economy unravel: The 2002 crisis of

7144-516: The state's irregular willingness to take them as payment of taxes and other charges. While the regional currency was frequently accepted at the same value as the peso, Entre Ríos Province 's Federal fared among the worst, discounted by an average 30% as even the provincial government that had issued them was reluctant to accept them. There were also frequent rumors that the first state would banish complementary currency overnight, leaving their holders with useless printed paper. Aerolíneas Argentinas

7238-537: The total; cereals added another 10%. Cattle-raising is also a major industry, though mostly for domestic consumption; beef, leather and dairy were 5% of total exports. Sheep-raising and wool are important in Patagonia , though these activities have declined by half since 1990. Biodiesel , however, has become one of the fastest growing agro-industrial activities, with over US$ 2 billion in exports in 2011. Fruits and vegetables made up 4% of exports: apples and pears in

7332-479: The unemployment rate, nearly 25%. Argentine agricultural products were rejected in some international markets for fear that they might have been damaged by the chaos. The US Department of Agriculture put restrictions on Argentine food and drug exports. Duhalde eventually stabilised the situation somewhat and called for elections. On 25 May 2003, Néstor Kirchner took office as the new president. Kirchner kept Duhalde's Minister of Economy, Roberto Lavagna . Lavagna,

7426-520: The value of the currency. That raised the quality of life for many citizens, who could again afford to travel abroad, buy imported goods or ask for credit in dollars at traditional interest rates. The fixed exchange rate reduced the cost of imports, which produced a flight of dollars from the country and a massive loss of industrial infrastructure and employment in industry . Argentina, however, still had external public debt that it needed to roll over. Government spending remained too high, and corruption

7520-498: The vote in the runoff election ) weakened the Argentine Peso by 50% to 800 per dollar, along with cuts to energy subsidies, cancellations of public works, and more. Although an impactful policy, Argentinians knew Milei would enact significant economic policies, as he openly supported extreme economic policies as a self-described anarcho-capitalist . As part of Javier Milei's plans the Government of Argentina announced in April 2024

7614-508: The weakened economy, the unemployment rate rose to 16.4% in August 2001 up from a 14.7% a month earlier, and it reached 20% by December. Public discontent with the economic conditions was expressed in the nationwide election . De la Rúa's alliance lost its majority in both chambers of Congress. Over 20% of voters chose to give blank or defaced ballots rather than indicate support of any candidate. The crisis intensified when, on 5 December 2001,

7708-433: The world, with 1.9 million tons produced, besides having produced 19 million tons of sugarcane , mainly in the province of Tucumán - Argentina produces near 2 million tons of sugar with the produced cane. In the same year Argentina produced 4.1 million tons of barley , being one of the 20 largest producers in the world of this cereal. The country is also one of the world's largest producers of sunflower seed : in 2010, it

7802-406: The world, with 37.7 million tons produced (behind only the US and Brazil); the 4th largest producer of maize in the world, with 43.5 million tons produced (behind only the US, China and Brazil); the 12th largest producer of wheat in the world, with 18.5 million tons produced; the 11th largest producer in the world of sorghum , with 1.5 million tons produced; the 10th largest producer of grape in

7896-486: The world; beer overtook wine production in 2000, and today leads by nearly two billion liters a year to one. Other manufactured goods include: glass and cement ; plastics and tires ; lumber products; textiles ; tobacco products ; recording and print media ; furniture ; apparel and leather . Argentine austral Finance Minister Juan Vital Sourrouille devised the Austral plan . The austral replaced

7990-487: Was a praise in disguise. The plan had enthusiastic supporters among mainstream economists (the most well-known being perhaps Martín Redrado , a former Banco Central de la República Argentina president) citing technical arguments. However, it was not implemented because the Rodríguez Saá government lacked the required political support. Rodriguez Saá lost the support of his own Justicialist Party and resigned before

8084-475: Was appointed Economy Minister at the outset of the dictatorship, and a neoliberal economic platform centered around anti-labour , monetarist policies of financial liberalization was introduced. Budget deficits jumped to 15% of GDP as the country went into debt for the state takeover of over $ 15 billion in private debts as well as unfinished projects, higher defense spending, and the Falklands War . By

8178-492: Was on par with Canada and Australia and had surpassed both France and Italy. Argentina's currency declined by about 50% in 2018 to more than 38 Argentine pesos per U.S. Dollar . As of that year, it is under a stand-by program from the International Monetary Fund . In 2019, the currency fell further by 25%. In 2020, it fell by 90%, in 2021, 68%, and a further 52% in 2022 (until July 20). Argentina

8272-427: Was one of the most affected Argentine companies, canceling all international flights for various days in 2002. The airline came close to bankruptcy but survived. Several thousand homeless and jobless Argentines found work as cartoneros , cardboard collectors. An estimate in 2003 had 30,000 to 40,000 people scavenging the streets for cardboard to sell to recycling plants. Such desperate measures were common because of

8366-417: Was rampant. Argentina's public debt grew enormously during the 1990s without showing that it could service the debt. The IMF kept lending money to Argentina and extending its payment schedules. Massive tax evasion and money laundering contributed to the movement of funds toward offshore banks . A congressional committee started investigations in 2001 over accusations that Central Bank Governor Pedro Pou ,

8460-624: Was set at 1.4 pesos per US dollar. In addition to the corralito , the Ministry of Economy dictated the pesificación ; all bank accounts denominated in dollars would be converted to pesos at an official rate. Deposits would be converted at 1.40 ARS per dollar and debt was converted on 1 to 1 basis. The exchange rate spiked as depositors converted their peso deposits back into US dollars. By October 2002, depositors who withdraw lost 50% of their value in dollars. That angered most savings holders and attempts were made to declare it unconstitutional. After

8554-510: Was the 31st world producer of steel , the 28th producer of vehicles , the 22nd world producer of beer , the 4th world producer of soybean oil and the 3rd world producer of sunflower oil , among other industrial products. Manufacturing is the largest single sector in the nation's economy (15% of GDP), and is well-integrated into Argentine agriculture, with half the nation's industrial exports being agricultural in nature. Based on food processing and textiles during its early development in

8648-891: Was the 3rd largest producer in the world with 2.2 million tons. In 2018, Argentina also produced 2.3 million tons of potato , almost 2 million tons of lemon , 1.3 million tons of rice , 1 million tons of orange , 921 thousand tons of peanut , 813 thousand tons of cotton , 707 thousand tons of onion , 656 thousand tons of tomato , 565 thousand tons of pear , 510 thousand tons of apple , 491 thousand tons of oats , 473 thousand tons of beans , 431 thousand tons of tangerine , 302 thousand tons of yerba mate , 283 thousand tons of carrot , 226 thousand tons of peach , 194 thousand tons of cassava , 174 thousand tons of olives , 174 thousand tons of banana , 148 thousand tons of garlic , 114 thousand tons of grapefruit , 110 thousand tons of artichoke , in addition to smaller productions of other agricultural products. In livestock, Argentina was, in 2019,

8742-538: Was the 4th largest world producer of lithium , the 9th largest world producer of silver , the 17th largest world producer of gold and the 7th largest world producer of boron . Around 35 million m³ each of petroleum and petroleum fuels are produced, as well as 50 billion m³ of natural gas, making the nation self-sufficient in these staples, and generating around 10% of exports. The most important oil fields lie in Patagonia and Cuyo . A network of pipelines send raw product to Bahía Blanca , center of

8836-428: Was the largest in emerging market history. In May 2018, Argentina's government asked the International Monetary Fund for its intervention, with an emergency loan for a $ 30 billion bailout , as reported by Bloomberg . In May 2018, the official estimated inflation had peaked up to 25 percent a year, and on 4 May Argentina's central bank raised interest rates on pesos to 40 percent from 27.25 percent, which

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