Argentina is a country that is as big as it is diverse. The country stretches from the tropical Iguazu falls in the North to the most southerly city in the world, Ushuaia, in Tierra del Fuego. While justifiably famed for tango, football and beef there is also a huge amount of cultural and geographic diversity in this country that is only slightly smaller than India, and now record numbers of visitors are coming to see this country for themselves. Estimates for 2003 put the number of visitors at 1.5 million. However, this is only a recent phenomenon, which has ironically been triggered by Argentina's economic woes.
Sadly the Argentine economy has been steady decline since its hay day in the earlier part of the 20th century. At that time Argentina's economy was comparable in size to that of France and the country was a magnet for immigrants attracting 6 million between 1857 and 1930. In a bid to halt the country's economic slide and to create some fiscal stability controversial ex-president Carlos Menem pegged the peso to the dollar and engaged in a process of mass privatization. This double policy, while initially fêted by international organizations like the IMF and the World Bank, was to have a detrimental effect on the Argentine economy. Privatization lead to soaring unemployment and the peg to the dollar lead to an artificially strong currency. In the short term it stopped inflation but it made Argentine exports prohibitively expensive in the face of cheaper imports. This inevitably led to a decline in Argentine manufacturing and exports. The worsening economic situation was further compounded by widespread corruption and ineffective governance. This drop in economic productivity would in the end lead to Argentina defaulting on $140 billion in public debt, the freezing of banks accounts, the devaluation of the peso by 70% and political instability with the country having 5 different presidents within a 2-week period.
The political vacuum and financial meltdown triggered violence with over 20 people loosing their lives. The freezing of bank accounts and the conversion of people's dollar savings to devalued pesos, a process called pesofication, brought the middle class out onto to the streets. People's anger was justifiable as they essentially saw their savings divided by three and become, in any case, inaccessible. The world looked on as Argentina was on the brink of anarchy.
Two years after the turmoil the situation has stabilized somewhat and in many regards the devaluation has created opportunities for argentine business. Tourism is one example that has already been touched upon as visitors enjoy the great value that can now be found in Argentina, particularly if you come armed with dollars, euros and pounds sterling. Argentine exporters too have been presented with a number of new opportunities. Exports are now comparatively cheap in the international market, and this has triggered an exporting boom. This is also not only true for Argentina's traditionally strong agriculture/commodities sector but also for manufacturing and clothing. Companies are also now struggling to meet a new domestic demand that is looking for substitutes for now expensive imports. This has spurred growth of 8.4% in the economy for 2003 with growth of 7% expected in 2004. While on the surface these figures seem impressive but on closer inspection one quickly discovers that the economy is only recovering to the level it was at in 1998 before it started its steep decline. In fact between 1998 and 2002 the economy contracted by 20%.