Argentina Economic Conditions

All indications are that 2019 will be a turbulent year in Argentina. A new presidential election is up for grabs, and it remains to be seen whether the now incumbent president, Mauricio Macri, will be able to sit or have to give way to a new president. Whatever the outcome, the list of challenges for the new government will not be short. There is no doubt that inflation and economic downturn, corruption charges and, not least, activists’ fight for legalized abortion will give the new government something to worry about. Latin American groups are currently working to update the country pages to provide a more up-to-date description of the political and social developments in Argentina. In the meantime, please read this article from 2015.

In October 2015, it is time for presidential elections in Argentina. After 12 years of “Kirchnerism”, the country now faces a double challenge: to avoid falling back into its neoliberal past and at the same time consolidating a new liberation policy project.

Cristina Fernandez de Kirchner’s government lost much of its support in the 2013 parliamentary elections. However, it managed to get through the ensuing fight against the vulture funds and rumors that the country was on the verge of a new bankruptcy. 2015 marks the end of Kirchner’s second presidential term, and one wonders what will happen to the political model that has been the starting point for the country’s development through Kirchner’s 12 years in government.

In contrast to neoliberalism (1975-2001), Kirchnerism rejected the idea of ​​reducing the role of the state. Instead, they have made the state a central tool for their politics and a link between the major national and international economic players and the Argentine people. According to its adherents, the Kirchnerist project does not represent an alternative to capitalism, but it aims to consolidate a “serious capitalism”, unlike Argentina has experienced in the past.

In terms of economic development, official statistics show the following: During 2014-2015, sales at both supermarkets (27.2 percent) and shopping malls (16.4 per cent) increased. So did energy production (4.3 percent), fuel consumption (9.4 percent), wage payments (24 percent), government spending (31.8 percent) and social security payments (38.9 percent).

In the area of ​​social policy, the government has implemented programs such as PROCREAR, a measure to assist disadvantaged families so that they can build their own homes. Moreover, they have not only recently introduced La Asignación Universal por Hijo, a child benefit for unemployed and low-paid mothers, they also want to introduce a law that allows the subsidy to be increased by inflation. Large sums have also been invested in science and technology, with the result that dozens of public universities have been established and that many more have gained access to higher education. In early 2015, the railway was also returned to the state, a measure that has been well received in large parts of the population despite the railway network being poorly developed and that there is no comprehensive plan for further development of the sector.

Despite the above statistics, it is fair to say that there is still a long way to go to develop a system that can ensure good welfare for the majority of the Argentine population. Redistributing the country’s wealth, measures to ensure a direct participatory democracy and developing a sustainable production model that respects both people and the environment are just some of the tasks that need to be solved in the years to come.

The payroll worker – a key player

A key challenge in today’s Argentina is the conflicts between employers and employees, which are increasingly resolved by the state intervening in favor of business owners. The devaluation of the currency and the subsequent price increase since 2012 has reduced the purchasing power of workers and led to increased poverty in vulnerable sections of the population. While the average family’s household spending has risen by 35 percent, the state-approved wage increase has been between 20 and 25 percent. This difference of almost ten percentage points is the main reason for the workers’ deteriorating financial situation. Within the trade union environment, many claim that the devaluation is part of the companies ‘and authorities’ plan to mitigate the consequences of the global financial crisis in 2008 to the working class.

Other sources of conflict are the 40 percent of employees working in the informal sector, as well as a narrowing of workers’ rights due to widespread use of temporary contracts and poor protection of jobs from competitive exposure. In addition comes the maintenance of a tax system that taxes employees harder than the business owners.

Argentina has a workforce of 12 million, of which 40 per cent are organized in unions. This percentage, which may seem low at first glance, is one of the highest in Latin America. One of the biggest challenges for the unions is the high degree of fragmentation, as there are a full five central organizations. In addition, one may question whether the leadership of professional organizations is sometimes more likely to support the interests of business owners, than the needs of the population as a whole.

Between 2012 and 2015, several general strikes have been carried out, all of which have received significant support. The strikers have advocated defending jobs and labor rights. Despite this, from mid-2013, layoffs, layoffs and expeditions of holidays were carried out in all kinds of industries in order to maintain profitability in the private sector.

2014 was a tough year for the Argentine economy according to The global financial crisis coincided with internal challenges in the Argentine industry, which in turn meant that no new jobs were created. On the contrary, major cuts have been made, not least in the automotive industry. At the time of writing, unemployment in Argentina has reached 9 percent.

Recovery model

A structural problem in the country is the intensification of a production model based on the extraction of natural resources, which, besides being highly polluting, is heavily controlled by foreign companies. That is, in recent years Argentina has returned to a more commodity-based economy while a large proportion of revenue goes to transnational companies.

The Argentine government has with great zeal facilitated growth in agrobusiness, the start-up of new large-scale mining and the expansion of unconventional oil and gas extraction. Building on arguments about the comparative benefits that the high prices of these goods would provide, the government established strategic alliances with transnational investors such as Monsanto, Chevron and Barrick Gold.

The downside of the extraction medal is that resources are gathered in few hands. Only 5.8 percent of the arable land is currently owned by small farmers, but these still account for a significant proportion of the food supply in the country. However, over the last 20 years the proportion of small farmers in the agricultural industry has decreased by 33 percent. In addition, there are currently nine million hectares of land belonging to small farmers and indigenous peoples that are claimed by the private or state sector. The Ministry of Justice, which has judicial authority in this conflict, is itself a driving force for the current development model. The state and private companies promise more jobs and regional development as a result of these major projects. However, if you look closely at, for example, large-scale mining, you will find that less than 0,

The problems surrounding the recovery model show that democracy has some limitations as an expression of popular opinion. If a population protests against environmentally harmful activities in their local environment, there are few formal channels they can use to reach and be heard. This is perhaps the main explanation for the local expressions of resistance and protest that have established themselves in different parts of the country.

An example is the Association of Public Assemblies (La Unión de Asambleas Ciudadanas), which saw the light of day in 2006 as they led the protests against the looting and pollution associated with the mining activities in La Rioja. In Islas Malvinas in Córdoba, the local assembly demonstrated against Monsanto’s establishment of a plantation with genetically engineered corn. This conflict is still ongoing. 29 mapuche villages in Neuquén oppose displacement and fight against fracking in the petroleum field Vaca Muerta, initiated by the Argentine state in collaboration with the transnational company Chevron. These are just a few examples of the contradictions between the interests of the prevailing economic model and the welfare of large sections of the population.


Capital: Buenos Aires
Population: 43.89 million (2016)
Life expectancy: 77.1 years (2016)
Infant mortality: 10.1 per 1000 (2016)
GDP per capita (pp): US $ 20,200 (2016)
Religion: Catholicism 92%, Protestantism 2%, Judaism 2% other 4%.
Official languages: Spanish
Currency: Argentine pesos
Export items: Soybeans and soy products, oil and gas, vehicles, wheat and maize.
Regional relations: Member of Mercosur, CELAC, UNASUR, OAS, Union Latina (observer)