Argentina overview

“With a mild climate, forgiving soil and vast

areas of undeveloped land, Argentina is a
prime beneficiary of the dash for growth by
China, India and other emerging markets.”
The Spectator, July 7th 2007

“Latins are tenderly enthusiastic.

In Brazil, they throw flowers at you.
In Argentina, they throw themselves.”
Marlene Dietrich

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Argentina
The Republic of Argentina stretches
4,000km from Bolivia in the north to
the very tip of South America, taking
in the Yunga rainforests, the arid
plains of the Andes and the Perito
Moreno Glacier on the way.
Thanks to an agricultural export led economy Argentina
was once one of the wealthiest and most powerful
countries in the world. But decades of political unrest
increased the country’s vulnerability and Argentina was
hit hard by a series of external financial crises that sent
BOLIVIA
the country into recession. Thanks to the leadership of
South
President Néstor Kirchner, Argentina has restructured its
Pacific CHILE BRAZIL

Ocean
PARAGUAY
debt and paid off all existing loans from the International
San Miguel Monetary Fund (IMF) totalling more than $100 billion.
de Tucumán Resistencia
Taking advantage of previously subdued industrial
capacity and labour, GDP has recovered remarkably
na
Rio Para

San
Juan
quickly to grow annually by approximately 8-9% over
Córdoba Santa Fe
the last five years.
Rosario
Rio Cuarto URUGUAY
Mendoza
Buenos Aires
La Plata

ARGENTINA
Ministro Pistarini Airport
How to get there
Bahia Blanca Mar del Plata British Airways fly direct from London Heathrow
Viedma
(stopping in Sao Paolo) to Buenos Aires’ Ministro
Pistarini (Ezeiza) International Airport. A new
San Carlos South 100,000m2 terminal is due to open there in late 2008.
de Bariloche
Atlantic
Ocean
Approximate flight time to Buenos Aires
Comodoro Rivadavia
From London: 16 hours
From New York: 10.5 hours
Puerto
From Moscow: 22 hours (depending on connection)
Santa Falkland Islands
Administered by U.K.
Cruz claimed by Argentina

Ushuala

Argentina at a glance
Population: 40,301,927
Capital city: Buenos Aires
Area: 2,766,890 km2
Climate Mostly temperate; arid in southeast; sub-Antarctic in the south
Average temperature July: 15 ºC
Average temperature January: 30 ºC
Official currency: Argentine Peso (ARS)
Language: Spanish (some French, English, Italian & German)
Time zone: -2/-3 GMT
Government: Constitutional republic


Why invest in Argentina?
A country on the up
Argentina’s economy famously collapsed in 2001
following three years of recession. But by 2003 the
country was already recording GDP growth of 8-9%,
which they have sustained for five consecutive years
– a reassuringly solid and swift recovery. Although many
predict the boom economy will start to slow, figures for
predicted GDP growth still average 5% until 20121. Since
the crash, the government has focussed on maintaining
a stable macroeconomic environment to avoid the
boom and bust cycle of previous years and to sustain
future growth.

More affluent population

Argentina’s middle classes continue to thrive as a result
of the economic upturn. More than 40% of the country
now fit into the middle-class demographic; double
the number from 20032. In Latin America, 15 million
households improved their incomes to the extent where
they were no longer considered ‘poor’. If this growth
continues, by 2010 the middle classes will be in
the majority.

Supply vs demand
In 2006 figures showed that there was a housing deficit
of two million in Argentina, with the capital Buenos
Aires suffering a 35% shortage alone3 – that equates to
700,000 new houses needed to meet demand. This is
an excellent situation for real estate investment as the
lack of supply keeps demand for quality housing high,
indicating potential for strong capital growth
and securing your exit strategy from the market.

Increased exporting power

Economy Minister Martin Lousteau is deliberately
The view of Iguazu Falls from Argentina
keeping the peso low against the US dollar in an effort
to keep export prices competitive. Interest in Argentina’s
commodity market has soared in recent years with
exports of soy-based fuels increasing rapidly. Now
almost 90% of the country’s biodiesel production is
going abroad as low transportation and labour costs
entice US buyers to purchase fuel from Argentina
over Southeast Asian palm-based products.4

Increasing finance availability

Mortgages are slowly becoming more available as the
economy stabilises. Currently nationals can obtain up
to an 80% mortgage over a maximum 20-year term as
long as they meet certain income criteria. As the finance
market establishes, mortgages will become more readily
available allowing more people to buy their own houses
further increasing the demand for suitable properties.
Overlooking part of the Quebrada en Cafayate, Salta, Argentina

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The breathtaking landscape in Patagonia

Investment in infrastructure
Argentina has also approached the World Bank to
secure infrastructure funding. The government has set
aside ARS1.2 billion for highway and railway works. Buenos
Aires will receive ARS800 million alone5. Another sign of the
country’s strength and commitment to development is the
announcement of the new South American development
bank, Banco del Sur; a joint venture with Venezuela, Brazil,
Bolivia, Ecuador and Paraguay. It is expected to have
capital of around $7 billion (€4.8 billion) with a remit to
promote integration of the Latam countries by funding
energy projects and improving infrastructure6.

Tourism is growing
The travel and tourism sector has also experienced rapid
improvement in the years following the 2001 economic
crash. The market has now steadied, enjoying gradual
progress, which the World Travel & Tourism Council
forecast to continue well into the next decade. Total
demand is predicted to grow by 4.4% per annum7 between
2008 and 2017, increasing by 20% the number of people
employed in the industry to around two million; a tenth of
Argentina’s total workforce.

The bustling city of Buenos Aires

1. http://www.economist.com/countries/Argentina/profile.cfm?folder=Profile%2DEconomic%20Data
2. http://www.economist.com/displaystory.cfm?story_id=9645142
3. http://www.bainversiones.mp.gba.gov.ar/downloads/real_estate_eng.pdf
4. http://uk.reuters.com/article/summitNews/idUKSP33865120080115?pageNumber=1&virtualBrandChannel=0
5. http://www.reportbuyer.com/industry_manufacturing/construction/argentina_infrastructure_report_q3_2007.html
6. http://search.ft.com/ftArticle?queryText=banco+del+sur&y=0&aje=false&x=0&id=071210000565&ct=0&nclick_check=1
7. http://www.wttc.travel/bin/pdf/original_pdf_file/1argentina.pdf


Political overview
Argentina, as part of the United Provinces of the
Rio Plata, won independence from Spain in 1816.
The following two centuries have been dominated by
periods of political unrest and financial crises, the most
recent of which sent the country into economic collapse.

After going through four heads of state in just 13 days

the country finally elected Néstor Kirchner to office.
The President managed to expand Argentina’s economy
by 50%1 and reduce poverty and unemployment figures
by half in the wake of the crisis, in what proved to be an
unexpectedly successful four-year term of office. He
publicly backed efforts to prosecute officials responsible
for the human rights atrocities committed during military
rule between 1976 and 19832. Kirchner also signed into
law a decree setting up a Joint Chiefs of Staff system,
thus moving the country towards a defence model,
used by most Western countries.

In December 2007 Cristina Fernández de Kirchner

succeeded her husband with 45.29% of the vote – 22%
higher than her nearest rival – to become Argentina’s
55th president and the country’s first elected female
leader. Her victory assures the continuation of the President Cristina Fernández de Kirchner, elected December 2007
current positive economic model, which is excellent
news for investors. She is also expected to devote more
attention to foreign policy3 and relations with the US
while continuing to maintain close ties with Venezuela
and Argentina’s other Latin American allies.

Presidential House Casa Rosada (Pink House) in Plaza de Mayo, Buenos Aires

1. http://www.economist.com/world/la/displaystory.cfm?story_id=10286016
2. http:/=/hrw.org/english/docs/2004/01/21/argent6979.htm
3. Global Insight Report: Argentina (Country Intelligence)

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Economic overview
Throughout the 1990s, the Argentine government
pursued a policy of trade liberalisation, deregulation
Since Argentina’s economic
and privatisation and for much of the decade Argentina collapse in 2002, the country has
enjoyed steady growth with low inflation. But in 1999
a 4% fall in GDP sent Argentina into a severe recession managed to return to growth with
culminating in 2001’s economic collapse, leaving the surprising strength… This was initially
country in chaos and owing more than $140 billion.
due to a surge in exports – breaking
In response to the crash, the interim President Eduardo
Duhalde abandoned the fixed link between the peso
all previous historical records.
and the US dollar, devaluing the currency and shrinking Jones Lang LaSalle, Buenos Aires City Profile
the economy by over 10%1. Ultimately however inflation
was brought under control, and devaluation boosted
Argentinean exports, enabling the country to return
to limited growth as soon as late-2002.

Argentina’s recovery since then has been remarkable,

averaging approximately 8% per year over the last
five years. Duhalde’s successor, President Néstor
Kirchner restructured and repaid Argentina’s debt to
the International Monetary Fund allowing the country
greater financial independence.

The new administration of President Cristina Fernández

appears to have recognised further foreign investment
in the country and the lifting of some price controls is
needed for economic growth to continue. The country’s
anticipated energy shortages have been allayed by the
biggest hydrocarbons discovery in recent years. Pan
American Energy have announced that the find, near the
existing Cerro Dragón field in the southern province of
Chubut, potentially contains 100million barrels of
oil equivalent2.

Argentina is classified as an upper-middle-income

economy by the World Bank and has the highest
Human Development Index in Latin America.

The “Cabildo” In Plaza de Mayo, Buenos Aires

1. http://www.fco.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/ShowPage&c=Page&cid=1007029394365&a=KCountryProfile&aid=1022763208173
2. http://www.ft.com/cms/s/0/3653bc3e-ce97-11dc-877a-000077b07658.html


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