Argentina: Macroeconomic Country Outlook
- According to GlobalData, GDP growth and household consumption expenditure are expected to slow down to 2.5% and 1.3% in 2022.
- Argentina was ranked 110th out of 136 nations in the GCRI Q4 2021.
- GlobalData forecasts the broadband penetration rate (per 100 people) to increase from 21.1 in 2021 to 23.4 by 2025.
PESTLE Summary
- Political: Improving international relations. The country is a part of the Community of Latin American and Caribbean States (CELAC) and the Organization of American States (OAS). Argentina is an active participant in international groups such as G20, the United Nations (UN), and World Trade Organization (WTO). The country was also a UN Human Rights Council member during 2018–2021. In April 2021, Argentina, along with Brazil, Paraguay and Uruguay, signed the Mercosur Agreement on E-Commerce, which will facilitate trade in goods and services through electronic means among the countries of the bloc.
- Economic: Argentina to prepare a farm sector roadmap for 2022–23. In December 2021, the government planned to implement a farm sector roadmap for 2022–23 to increase the country's agriculture sector's overall productivity. Argentina is one of the top global exporters of processed soy, followed by corn, and fifth in beef production. However, the country suffered regular protests from the farm sector and workers in 2020, affecting production and shipments, thereby increasing food prices. The government in 2020 put a cap on corn exports and threatened to raise taxes on wheat shipments, along with strict limits on beef exports, which resulted in tensions in the farm sector.
- Social: Low gender equality in the country. According to the World Economic Forum's Global Gender Gap Index – 2021, Argentina is ranked 35th out of 149 countries, which is a lower rank than Mexico (34th). Argentina needs to implement more policies to improve the economic participation of women in the country. The country was ranked 103rd out of 153 countries in terms of economic participation and job opportunities in the Global Gender Gap Index – 2021.
- Technological: Importance of science and technology in the country. The country has a Scientific Technological Cabinet chaired by a cabinet minister. The government has formulated an 'Argentina Innovadora 2030' plan to advance science and technology in the country. One of the main pillars of this plan is institutional development to strengthen the scientific-technological system. The plan aims to transform the economy by promoting the most advanced technologies, consolidating resources, reforming the financing pattern of the science and technology projects, and updating the general regulations regarding science, technology, and innovation.
- Legal: Argentina implemented a "millionaire tax" in January 2021. In January 2021, Argentina implemented a "millionaire tax," a tax that would be imposed on the country's wealthiest citizens. The tax comes into effect to pay for medical supplies and businesses that the COVID-19 pandemic has severely impacted. According to this taxation system, individuals with wealth over ARS200m ($2.3 million) are expected to pay 3% on assets declared within the country and 5% on assets held abroad.
- Environmental: The government is promoting clean energy: To combat climate change, Argentina is focusing on the production of clean energy. According to the Argentina government, the country met 14.2% of its demand for power with renewable energy in September 2021. According to the government, in August 2021, the renewable share in the nation's electricity demand was 13.3% up from 12.9% (1,600.4 GWh) in July 2021. Furthermore, the country aims to reduce greenhouse gas emissions by 79.6 million (tons of carbon dioxide equivalent) over the next 20 years.
Key Fundamentals
Macroeconomic Outlook
- Argentina is one of the largest economies among Latin American countries, with a Nominal Gross Domestic Product (GDP) per capita amounting to $9,653.2 in 2021, compared to Brazil ($7,489.7), Peru (6,595.1) and Venezuela ($2,095.6) according to GlobalData.
- In December 2021, the World Bank approved $400 million in loans to implement climate-smart, innovative practices to boost the productivity and competitiveness of Argentina's agri-food system. This will help foster green development through investments in climate-resilient infrastructure and encourages private investment to increase producers' market access and profitability.
- In January 2022, the Government of Argentina extended its export ban on seven beef cuts to counter the ever-rising meat prices for local consumers until 2023. The recent surge in inflation has made staple food unaffordable to many Argentines, to which the government decided to impose price controls. The government intends to bring down prices to increase affordability in the short term by implementing price controls.
- In January 2022, the government is seeking to implement new policies and incentives to encourage growth in mining activity. The government wants to triple its mining output over the next decade.
GlobalData Country Risk Index (GCRI) - Q4 2021
Argentina was ranked 110th out of 136 nations in the GCRI Q4 2021. The country's score is in the high-risk nations band (between 50 and 60). Argentina's overall risk score is higher than the Latin American countries and the world average in GCRI Q4 2021. The country had an overall score of 55.1 and performed well (compared to the Latin American average) in the political and environmental parameters. However, its risk score was relatively higher in macroeconomic, technology and legal parameters.
GCRI Methodology
GlobalData's unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developments in an economy. The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources and incorporates proprietary data from GlobalData. Latin American nations in this publication include Argentina, Brazil, Chile, Columbia, Mexico, Peru, Venezuela, and Ecuador.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis, which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each pillar of PESTLE, economic growth prospects, and key events that can impact the country's future outlook.
More details: Argentina PESTLE Insights - A Macroeconomic Outlook Report
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