Argentina country brief

Overview

Argentina is the eighth largest country in the world, with a land area slightly larger than Western Australia. It is dominated geographically by the Andes mountain range in the west, the fertile Pampas region in the centre, the hot and dry Chaco in the north, the riverine provinces to the east and Patagonia to the south. The name Argentina derives from the Latin word for silver. The capital of Argentina is Buenos Aires.

Argentina's population is approximately 43.1 million (2015), composed mostly of the descendants of European immigrants. The Argentine indigenous population is estimated at just below two per cent of the total. Catholicism is the main religion and Spanish is the official language.

Australia and Argentina have a mutually beneficial relationship based on many shared interests. We are both large Southern Hemisphere nations with relatively small populations and strong resource bases. Australia and Argentina agreed in principle to exchange diplomatic missions in December 1959, with Argentina opening its first post in Sydney in 1962 (moving to Canberra in 1963). Australia sent its first ambassador to Buenos Aires in 1964, and we currently maintain resident embassies in each other's capitals.

Australia's principal engagement with Argentina is through the Cairns Group, the WTO, the G20, the UN, the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR), the Antarctic Treaty and the International Whaling Commission (IWC). We also share common interests in international peacekeeping, the prevention of WMD proliferation, disarmament, human rights, international environment policy, agricultural trade liberalisation and economic cooperation policies.

Political overview

The Spanish established a permanent colony on the site of Buenos Aires in 1580 following sporadic settlement overland from Peru. Argentina declared independence from Spain in 1816. Despite a prosperous start to the 20th Century, political and economic turmoil resulted in a military coup in 1943 led, among others, by Juan Domingo Perón. Elected President in 1946, Perón undertook radical industrial and labour reforms. Despite winning re-election in 1953, he was exiled by the military in 1955. This was followed by a period of political instability and diminished economic growth, paving the way for Perón's return to the presidency in 1973. Perón died in 1974 and was succeeded by his third wife, Maria Estela "Isabel" Martínez de Perón, but she was ousted in another military coup in 1976. The ensuing period of repression under the military junta, known as the 'Dirty War', resulted in over 9,000 recorded political murders and disappearances.

Argentina returned to civilian government in 1983. Since that time, the country's democratic institutions have been consolidated. This has not, however, been matched by similarly enduring financial and economic stability. In 2001, a profound economic crisis provoked serious civil unrest and resulted in the resignation of then President De la Rúa in December. After a period of transition under a caretaker administration, presidential elections were held in 2003 in which Néstor Kirchner came to power. With high public approval ratings, Kirchner's government focused on restructuring Argentina's foreign debt and promoting economic growth.

Kirchner was succeeded in 2007 by his wife, Cristina Fernández de Kirchner, a seasoned politician in her own right. Fernández stepped up her husband's unorthodox economic programme, with mixed results. In 2011, on the back of record-high approval ratings, Fernández was re-elected by a landslide for a second four-year term. In part, the outcome reflected a groundswell of public sympathy for Fernández after Néstor Kirchner's untimely death of a heart attack in 2010.

In Fernández's second term, her administration ran into increasing economic difficulties, with a less favourable external context and worsening energy bottlenecks and inflationary pressures at home. The government fared poorly in mid-term legislative elections held in 2013.

The 2015 presidential election was won, by a small but clear margin, by opposition candidate and former Buenos Aires city mayor Mauricio Macri of the centre-right Cambiemos ("Let's Change") coalition. Macri, whose government is working to address significant economic and political challenges, has moved quickly to assert his authority, making a raft of major policy announcements very early on.

System of government

Argentina is a presidential democracy, with universal suffrage and compulsory voting. Under the current constitution (last reformed in 1994), the President is the head of state and government and the Congress is bicameral. Argentina is a federation of 23 provinces, plus Buenos Aires City, the self-governed capital.

The system of government (at both the federal and provincial levels) is based on the separation of powers between the Executive branch, the Legislative branch and the Judiciary. The President and Vice-President are chosen by direct popular vote for a four-year presidential term, and may run for one consecutive re-election. The President appoints the ministers, who cannot simultaneously serve in Congress.

Recent developments

One year into a four-year term, Argentine President Mauricio Macri is pushing ahead with efforts to normalise the country's policy settings and rectify the economic distortions created by his predecessors. Reform initiatives have been assisted by divisions in the opposition Peronist party, currently lacking direction with former President Cristina Fernández de Kirchner caught up in a series of corruption scandals, and no alternative leader in sight. The Macri government suffered a setback mid-year with a Supreme Court ruling suspending utility rate hikes aimed at ending subsidies, but regrouped quickly to announce an alternative tariff program. A well-attended international business and investment forum in Buenos Aires, and Argentina's successful bid to host the WTO Ministerial Conference in 2017 and the G20 in 2018, showcased the government's ongoing drive to re-engage with the global community.

Foreign policy

Argentina is active in the G20, United Nations, and WTO. It served most recently on the UN Economic and Social Council from 2015-2017, on the United Nations Security Council from 2013-2014, the and the UN Human Rights Council from 2013-2016. Argentina will host the 11th Ministerial Conference of WTO Ministers in 2017 and will host the G20 in 2018. In 2016 Argentina announced its ambition to seek membership of the OECD.

The Southern Cone Common Market (Mercosur), which includes Argentina, Brazil, Paraguay, Uruguay, and Venezuela (now suspended), is Argentina's most important trade agreement. It applies a common external tariff on most products.  Together the five Mercosur countries encompass approximately 72 per cent of the territory of South America (12.8 million km2, equivalent to three times the area of the European Union) and close to 70 per cent of the South American population. It totals 285.0 million inhabitants and combined GDP of $3.5 trillion according to World Bank data (2015). Associate members of Mercosur include Chile, Colombia, Ecuador, Guyana, Peru, Suriname and Bolivia which is in the process of becoming a full member.  Mexico is an Observer.

Argentina is also a member of the Union of South American Nations (UNASUR), the Community of Latin American and Caribbean States (CELAC) and the Organisation of American States (OAS), that seek to advance a variety of regional political and economic interests.

Brazil is Argentina's largest trading partner, followed by China and the United States. Argentina is increasingly looking to China as a source of investment, particularly in infrastructure.

Bilateral relations

Australia has a long-standing bilateral relationship with Argentina through trade, cooperation, tourism and people-to-people links, including student exchanges. Argentina also shares interests in international peacekeeping, the prevention of WMD proliferation, disarmament, environmental issues, agricultural trade liberalisation (Cairns Group) and economic cooperation. Argentina and Australia also work together on issues relating to the Antarctic, especially in efforts to address illegal fishing through the Convention on the Conservation of Antarctic Marine Living Resources (CCAMLR).

Under the administration of President Macri, Argentine Ministers have highlighted the growing convergence with Australia on economic and trade policy matters. They are keen to enhance cooperation in mining, energy, education, science, transport, agriculture, culture, innovation and productivity. Argentina welcomed a visit by Chair of the Productivity Commission, Peter Harris, in October 2016.

The Governor-General of Australia, Sir Peter Cosgrove, visited Argentina in August 2016 during which he was awarded the Order of the Liberator General San Martin by President Mauricio Macri. This was the first time a Governor-General of Australia had visited Argentina and Latin America in an official capacity.

People to people links

There is strong two-way tourism trade between the two nations. There were 11,400 short-term visitors from Argentina visiting Australia in 2015 (representing eight per cent growth over 5 years), and 10,800 Australian short-term visitors to Argentina the same year. Tourism has the potential to grow even further through appropriate marketing and increased air links. Air links were boosted by the December 2015 commencement of Buenos Aires-Auckland direct flights with Air New Zealand (connecting to Australian cities with Virgin).

There were 446 Argentines studying in Australia in December 2015, a 25 per cent increase on 2014. Our reciprocal Work and Holiday Visa Arrangement (MOU signed 2011) has proven very popular with Argentines. The annual cap increased on 1 July 2015 from 500 to 700 visas per year, and the quota for Argentina was full within the first two months of release.  Australian expertise in distance education, vocational training, English as a second language and postgraduate studies is valued in Argentina - the Trades University in the province of San Luis is modelled 100 per cent on the Victorian TAFE system.

In 2012 Argentina's national Rugby Union team was permanently included in the Rugby Championship, which sees Australia and Argentina play each other twice a year, once at home and once away. From 2016 an Argentine team played in the Super Rugby tournament contested between teams from South Africa, New Zealand and Australia.

In 2001, the Australian Government established the Council on Australia-Latin America Relations (COALAR) which aims to enhance commercial, political and cultural relations between Australia and Latin America. Since its inception, COALAR has been active in promoting business, education, tourism and cultural links between Australia and Latin America. For updates on COALAR activities and information on the annual grants program, follow COALAR on Facebook.

Development assistance

Argentina has been awarded 60 Australia Awards Fellowships, including fifteen at Swinburne University in 2017 for a residential program on economic reform and deregulation.

From 2010 to 2014, Australia provided A$100 million in development assistance to Latin America, including 250 Australia Awards scholarships. Sixteen Australia Awards scholarships were awarded to Argentine students under that program. The regional program has now closed, though some activities which have already been funded will continue until 2017.

Economic overview

For latest economic data refer to Argentina Fact Sheet [PDF 35 KB]. More information can be found at the World Bank and International Monetary Fund websites.

Argentina's economy is based on an abundance of natural resources, a highly literate population and an export-oriented agricultural sector. Although Argentina is an industrialised country, its exports continue to be dominated by agricultural products. In the last decade, soybeans have become the country's main commodity export. Exports of industrial goods have, however, also grown in recent years.

After decades of economic stagnation, economic reforms in the 1990s opened the market to foreign competition. Privatisation and economic deregulation saw foreign investment soar and GDP grow, with large domestic conglomerates and multinationals dominating the industrial base and utilities. For a decade, economic policy was based on the Convertibility Law of 1991, which sought to end hyperinflation and attract investment by establishing a currency board system that maintained parity between the Argentine peso and the US dollar. However, the scheme, together with a lack of fiscal discipline, ultimately reduced Argentina's flexibility to deal with external shocks and led to a recession, with high unemployment and a swelling public debt.

In December 2000, the De la Rúa government resorted to a US$39 billion IMF bail-out to address concerns that the country would default on its debt. This package afforded Argentina only a short respite. Subsequent government initiatives failed to cap public spending and Argentina eventually entered into a US$98 billion default with private creditors. This was followed by political and social conflict, the collapse of the financial system and the fall of the government in December 2001. A transitional government applied emergency measures to devalue the peso and set a floating exchange-rate regime.

After coming to power in May 2003, Néstor Kirchner's government made progress in stabilising inflation and maintaining the primary surplus, together with a strong trade surplus. This process was aided by favourable international prices for Argentina's commodity exports. The government introduced policies that put the economy back on a firm footing and laid the foundation for growth, falling unemployment and poverty reduction. However, little progress was made on structural reform, including restructuring the banking system, implementing tax reform, and establishing a new fiscal relationship between the central government and provinces.

In its two terms in office, the Fernández government used its high popularity and majority in Congress to pass a number of controversial pieces of legislation, as well as the expansion of import and foreign exchange controls. The introduction of measures aimed at slowing the flow of manufactured imports met with criticism as being protectionist, and caused tensions within Mercosur and with major trading partners. Inflation has remained at high levels since 2010.

In 2005 and 2010 Argentina successfully renegotiated its debt with the majority of private creditors (93 per cent), who agreed to receive partial repayment. In 2014, Argentina compensated Spanish company Repsol for the seizure of its controlling stake in oil giant YPF and signed an agreement to fully repay its debt arrears with the Paris Club group of creditors. However, following many years of legal dispute in the US with a group of creditors who had not agreed to the 2005 and 2010 debt swap deals, in July 2014 Argentina entered into what was described as a 'selective default' after a New York court ordered it to repay in full the amounts owed to the remaining seven per cent of 'holdout' creditors.

In its first year in office, the Macri administration has sought to improve export competitiveness and encourage foreign investment. The new government acted quickly to implement reforms open up the Argentine economy including a unified, floating exchange rate, adjustment of tariffs and subsidies, reduction of export taxes, and deregulation of the economy to make the country more attractive to foreign investment. The government also rapidly settled the dispute with holdout sovereign debt creditors in New York, ending default and restoring Argentina's access to international money markets.

In 2015, Argentina's principal export destinations were Brazil (17.8 per cent), China (9.1 per cent) and the United States (6.0 per cent). Its major exports include agricultural products, motor vehicles and parts, chemicals and related products, crude oil and fuels and base metals. In 2015, Argentina's principal import sources were Brazil (21.8 per cent), China (19.7 per cent) and the United States (12.9 per cent).

Economic outlook

Economic activity remains weak due to low commodity prices, the recession in Brazil and a focus on fighting inflation. Modest signs of a recovery in consumer confidence and construction activity and a more optimistic outlook in Brazil point to a return to growth in 2017. The government's efforts to  control inflation are expected to see annualised monthly inflation return to around 20 per cent per annum by the end of 2017, down from a peak of over 40 per cent in 2016.

Given Argentina's relatively low levels of foreign debt, the administration will draw on international sources to finance the fiscal deficit as it goes about the task of long-term budget repair. The government is seeking a more gradual fiscal adjustment for both political and economic reasons, accommodating recently announced income-tax reforms and the longer timeframe for utility price rises.

The overhauling of the national statistics agency, ending a period  of data manipulation by the previous government, was another important milestone. The IMF welcomed the changes and has resumed its Article IV review of Argentina's economy in September 2016, after a ten-year hiatus.  Argentina has also indicated its intention to work towards membership of the OECD by implementing an extensive reform program.

Bilateral economic and trade relationship

The Macri government's economic reform program promises to strengthen international relations with Australia through its study of Australia's own economic reform experiences.

Trade with Argentina is modest, with the balance in trade generally favouring Argentina since the onset of its economic crisis in 2001. Two-way merchandise trade exceeded the half-billion dollar mark for the first time in 2008, and reached A$1.1 billion in 2015 (showing 28.5 per cent year on year growth). Australian exports to Argentina totalled A$337 million in 2015, approximately three times the 2014 figure. Exports consisted mainly of coal and then fertilisers (excluding crude). Australian imports from Argentina totalled A$828 million in 2015, up from $771 million in 2014. Imports included animal feed, goods vehicles, vegetable oils and fats, and leather. Two-way trade in services totalled A$113 million in 2015.

Over 50 Australian companies operate in Argentina, including 10 ASX200 companies. Total Australian investment in Argentina is estimated at around A$372 million (2015), of which A$251 million is direct. Sectors of interest have included mining, agribusiness, entertainment, port management, freight equipment and insurance services.

Australia and Argentina have played an active role in the G20 forum in addressing the global financial crisis and continue to work closely together in identifying reforms to the global financial system. Argentina's role as an interlocutor on the WTO Doha Round negotiations and in the Cairns Group is important to Australia. As major wine-producing nations, the two countries also cooperate through the World Wine Trade Group to improve conditions for international trade in wine.

Australia also participates in the CER-Mercosur Dialogue, bringing together Australia, New Zealand and the Mercosur member countries. The dialogue was established in 1996 as a mechanism to strengthen cooperation on global trade policy issues and to promote inter-regional trade and investment.

Australia and Argentina are both members of the Forum for East Asia-Latin America Cooperation (FEALAC), which aims to increase and improve mutual understanding, political dialogue and cooperation among member states of East Asia and Latin America.

Argentina and Australia signed an Investment Protection Agreement in 1997. A Double Taxation Agreement entered into force in 2000. An Agreement on Cooperation in the peaceful uses of Nuclear Energy entered into force in 2005.

Export and, in particular, investment opportunities for Australia can be found in mining, oil and gas and most areas of primary production and agribusiness. Opportunities also exist for Australia in the revitalisation of Argentine industry and in the communications, transport and public utilities sectors. Other sectors with promise are environmental management, water management, wine, construction and building equipment, high-tech machinery and services.

Agribusiness is a sector in which Argentina and Australia are natural partners in terms of abundance of land, soil quality, and agricultural productivity. Two large Argentine companies participated in the 2015 Northern Australia Investment Forum. The framework for increased collaboration is in place with the agreement of a bilateral MOU on cooperation in agriculture in December 2015.

Science and technology: 2016 marks the 10th Anniversary of the Lucas Heights Open-Pool Australian Lightwater (OPAL) nuclear research reactor in NSW, built according to the design and advice of Argentine company INVAP. In November 2016, Argentina's Minister for Science, Technology and Productive Innovation, Dr. Lino Barañao visited Australia to strengthen relations in these fields. The Australia-Argentina MOU on Science and Technology was signed in 2003.

In summary, Australia and Argentina have bilateral government to government MOUs on investment protection (1997), minerals trade and investment (1998), double taxation (2000), education and training (2001), science and technology (2003), air services (2005); work and holiday visas (2011); development of rail infrastructure in Argentina (renewed in 2015), agriculture (2015); and exchange of information on migration matters (2015).

The Australian Parliamentary friends of Argentina Group was established in November 2016. The Argentine Chamber of Commerce – Australia (ArCham) was launched in September 2016, and the Australian-Argentine Business Council was launched in June 2016. The Argentine-Australian Chamber of Commerce and Industry (AusCham) was launched in Buenos Aires in September 2016.

For information on doing business and opportunities in Argentina please see the Austrade website: Argentina Market Profile.

High level visits

August 2016: The Governor General Sir Peter Cosgrove and Lady Cosgrove visited Argentina.

November 2016: Argentina's Minister for Science and Technology, Mr Lino Barañao, visited Australia.

April 2016: President of the Legislative Assembly of Victoria, the Hon Telmo Languiller MP, visited Argentina.

May 2015: Natasha Stott Despoja, the Ambassador for Women and Girls, visited Buenos Aires, where she was declared an honoured guest of the Buenos Aires City Government.

January 2015: The Speaker of the House of Representatives, the Hon Bronwyn Bishop MP visited Argentina to further bilateral relations and to develop parliamentary links.

November 2014: Argentine Finance Minister Kicillof and Foreign Minister Timerman both visited Australia for the G20 Leaders’ Summit in Brisbane.

August 2014: Argentine Agriculture Secretary Gabriel Delgado visited Australia, where he met with the Department of Agriculture to discuss issues of bilateral interest and the MOU on cooperation in agriculture (concluded in 2015).

September 2013: An Argentine delegation including provincial and national government and business representatives, led by the Governor of San Luis, Claudio Poggi, visited Australia for meetings in relation to technical education, agriculture and water management.

June 2013: The Hon John Hogg, President of the Senate, visited Argentina.

October 2012: An Australian Parliamentary delegation visited Argentina.

October 2010: a Congressional delegation from Argentina visited Australia and met with key government officials, academics and representatives from the business sector.

April 2010: Minister for Trade, the Hon Simon Crean visited Argentina for meetings with senior government members.


Last Updated: 3 January 2017