ARGENTINA Advantages of Investing Today - The Argentine Economy
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Advantages of Investing Today
ARGENTINA
Advantages of Investing
Today
Secretariat of Industry, Commerce, and
SMEs
Ministry of Economy and Production
Advantages of Investing Today
The Argentine Economy
1
Advantages of Investing Today
Argentina at a Glance
Surface Area 2.8 million km²
Argentina is the 2nd largest country in Latin America
and the 8th largest worldwide in terms of surface area
Population 36,223,947
GDP (2004 est.) US$ 145 billion
Growth (2003) 8.7%
Per Capita GDP US$ 4,003
(2004 est.)
Form of Government Republican, Representative, and Federal
Political Subdivisions 24 autonomous States with political, administrative and
economic powers
(23 provinces and the City of Buenos Aires)
Currency Argentine Peso (Arg$)
Language Spanish
Advantages of Investing Today
In terms of purchasing power, Argentina boasts the highest per
capita income in Latin America.
Per capita GDP 2003
(Purchasing Power Parity)
11,013
9,993
9,070
8,015
6,773
4,363
Venezuela Colombia Brazil Mexico Chile Argentina
Source: World Economic Outlook 2004 (IMF)
2
Advantages of Investing Today
The Argentine economy is highly diversified …
GDP by Economic Sector, 2003
Services, 54% Goods, 46%
Wholesale, Retail,
and Repairs; 21%
Manufacturing
Real Estate, Rental, Industry; 52%
and Other Business
Activities, 22%
Transport, Fisheries; 1%
Warehousing,
and Hotels and Electricity, Gas,
Communications; Restaurants; 4% and Water
16% Supply; 4%
Education, Social, Other Services; 7% Agriculture, Construction;
and Health Fishing, 7%
Services; 13% Financial Hunting, and Mining and
Intermediation: Silviculture; Quarrying; 13%
Public Administration, 23%
Defense, and 7%
Extraterritorial Activities; Source: ADI based on National Accounts
10%
Advantages of Investing Today
with an ample supply of skilled labor …
Illiteracy Rate 2002
Illiterate population over age 15 (%)
12.3%
Latin America and the Caribbean: 10.5%
8.3%
4.0%
3.0%
2.2%
1.5%
Italy Spain Argentina Chile Mexico Brazil
Source: World Bank
• The illiteracy rate is the lowest in Latin America and compares with developed countries.
3
Advantages of Investing Today
… high availability of natural resources …
• Argentina has just under 250,000 km² of arable land.
• This wealth of fertile land and a competitive industry makes Argentina:
Ö The world’s leading producer and exporter of sunflower oil
Ö The world’s leading exporter and third largest producer of soybean oil
Ö The world’s leading exporter and second largest producer of honey
Ö The world’s leading exporter of horse meat
Ö The world’s second largest exporter of corn
Ö The world’s third largest producer of soybeans
Ö The world’s third largest producer and second largest exporter of
lemons
Ö The world’s third largest producer of beef
Ö The world’s sixth largest producer of wine Source: FAO (2003)
Advantages of Investing Today
… and considerable energy resource reserves.
CONFIRMED RESERVES AS AT 12/31/2002
Oil (Mm3) Gas (Mill m3)
Basin
Confirmed Probable Confirmed Probable
North West 25,326 7,880 129,481 44,524
Cuyo 31,097 6,713 545 183
Neuquen 344,567 97,180
179,546 67,145
San Jorge Gulf 188,040 75,519 40,289 25,833
Southern 24,416 22,430 148,641 138,398
NATIONAL TOTAL 448,425 179,687 663,523 306,118
Source: Energy Secretariat
4
Advantages of Investing Today
Domestic industry is modern and competitive …
• Argentine industrial structure is broad • Annual domestic industrial production
and diversified. includes:
– 6 million tons of oilseed oils
• Highly competitive industrial sectors – 12.3 million hectoliters of wine
boast world class enterprises. – 2 million tons of sugar
– 300,000 tons of tanned leather
• Companies including Shell, Exxon, Ford, – 1.2 million tons of paper
Coca-Cola, Fiat, Bayer, Renault, – 170,000 tons of PVC and 545,000 tons
of polyetyhlene
Siemens, Nestlé, Firestone, BASF, Pirelli
– 48,000 tons of synthetic yarns
and Abbot have been operating in – 275,000 tons of aluminium
Argentina for over 50 years. – 5 million tons of steel and 732,000
tons of seamless pipes
– 5,000 harvesters
– 260,000 automobiles
Advantages of Investing Today
… with a highly developed infrastructure.
• A 38,744 km national road
network TELECOMMUNICATIONS
• This extends to 500,000 kms if Latin Am. &
the provincial and municipal per 1000 inhabitants Argentina Brazil Mexico
the Caribbean
networks are included
Telephone Lines 220.2 182.1 124.7 145.9
• A 35,753 km railway network
Cellular Phones 168.8 136.6 142.4 70.5
• 38 maritime ports and 25 river
PCs 91.1 62.9 68.7 59.3
ports
• 52 airports, 21 of which are Source: World Bank (2002)
international
• Over 25 airlines operate flights • Installed electrical energy generating capacity
from Argentina to 40 totals 21,300 MW, while annual production stands
international destinations in at 75,554 GWh (2,084 KWh/ inhabitant)
five continents
5
Advantages of Investing Today
Social conditions in Argentina are above the regional average.
Lat. Am. &
Socioeconomic Indicators 2002 Argentina Brazil Mexico Carib.
Average
Life Expectancy at Birth (years) 74.3 68.6 73.6 70.7
Fertility Rate (births per female) 2.4 2.1 2.5 2.5
Infant Mortality Rate (0/00) 16 31 24 27.5
Hospital Beds per 1,000 Inhabitants 3.3 3.1 1.1 2.2
Doctors per 1,000 Inhabitants 2.7 1.3 1.6 1.6
Source: World Bank
Life Expectancy at Birth (years): Number of years a newborn infant will live if the mortality patterns at the time of birth
remain constant throughout the entire lifespan .
Fertility Rate (births per female): Number of births per female, assuming a full fertile lifespan and
births in line with age group-specific fertility rates.
Infant Mortality Rate (0/00): Number of infant deaths in the first year of life per1,000 live births.
Advantages of Investing Today
As a MERCOSUR Member State, Argentina enjoys preferential
access to a market totalling 272 million consumers.
MERCOSUR + MERCOSUR
ASSOCIATES
GDP: US$ 558
GDP: US$ 687 billion
billion
Population:
Population: 272 221 million
million
Source: IMF (2003)
• The MERCOSUR (Southern Cone Common Market) is a common market
comprising Argentina, Brazil, Paraguay and Uruguay.
• Bolivia, Chile and Peru are MERCOSUR Associate States.
6
Advantages of Investing Today
Since the creation of MERCOSUR, there has been strong growth in
trade between Argentina and the other MERCOSUR Member
States ...
• Argentine exports to the
bloc increased by 181% Argentina-MERCOSUR Trade
(in millions of US$)
between 1991 and 2003 Exports Imports Trade Balance
10,000
( 30% more than sales
to the rest of the world). 8,000
6,000
• Imports from
MERCOSUR practically 4,000
tripled over the same 2,000
period. 0
1991 1993 1995 1997 1999 2001 2003
-2,000
Source: INDEC.
In 2003, 6,500 companies registered exports to the value
of US$ 5,555 million to MERCOSUR.
Advantages of Investing Today
… resulting in a higher value added export profile.
Exports US$/ ton (2003)
Exports
to MERCOSUR to other markets MERCOSUR 375
2003 2003
IM PP Other Markets 300
47% 21% IM PP
21% 23%
PP: Primary Products
AM: Agricultural Manufactures
IM: Industrial Manufactures
F&E F&E F&E: Fuel and Energy
AM
20% 17%
39%
AM
12% Source: ADI based on INDEC
• 33% of total industrial manufacture exports go to MERCOSUR.
• The export value per-ton to MERCOSUR is 25% higher than to other markets.
7
Advantages of Investing Today
Argentina ranks as an integrated economy.
• Since the late 80s and as a result of a significant reduction in tariff and non-tariff
barriers, foreign trade has been particularly dynamic, a phenomenon that does not
exclude trade with the region.
Non-MERCOSUR Trade
(in millions of US$)
Exports Imports Trade Balance
25,000
20,000
15,000
10,000
5,000
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
-5,000
Source: ADI based on INDEC data
-10,000
Advantages of Investing Today
An integrated economy with its doors open to the world.
FOREIGN DIRECT INVESTMENT FLOWS (FDI)
TO ARGENTINA –IN MILLIONS OF US$-
1993 1999 2000 2001 2002 2003
FDI 2,793 23,988 11,657 3,206 785 478
GDP 236,505 278,369 276,173 263,997 235,236 255,751
FDI/GDP 1.2% 8.6% 4.2% 1.2% 0.3% 0.2%
Source: Ministry of Economy
Foreign Direct Investment
By Economic Sector (1992-2002)
Oil
Manufacturing
20%
• The opening of the capital Industry
34%
market and solid economic
Electricity, Gas,
performance attracted and Water
14% Mining
numerous foreign direct 1%
Banks
investment projects in various 10% Trade
4%
sectors of the economy. Transport and
Communications Others
9% 8%
Source: ADI based on Ministry of Economy data
8
Advantages of Investing Today
Argentina in the
new economic context
Advantages of Investing Today
The economy staged a gradual recovery following the crisis that
began in mid-1998 and ended with the abandonment of the
Convertibility Regime in January 2002.
• 8 consecutive quarters of
growth were recorded as
from 2Q 2002, a sequence
that had not been
witnessed since 1997.
• The surge in growth is also
noteworthy: Variation rates
reached 3% in the last
months of the series.
9
Advantages of Investing Today
The manufacturing industry led the recovery, reaching the 1998
level in March 2004, only 4% below the historical record (June
1998).
Advantages of Investing Today
There was renewed growth in the construction industry,
surpassing 2000 and 2001 levels.
Source: ADI based on Ministry of Economy data
10Advantages of Investing Today
There has been a gradual recovery in investment as from 4Q
2002.
Gross Domestic Fixed Investment and
Investment Rate (GDFI/GDP)
GDFI (in millions of pesos) Investment Rate (%)
45,000 16%
15.6%
15%
40,000
14%
35,000
13%
30,000
12%
11.3%
25,000
11%
20,000 10%
1Q-02 2Q-02 3Q-02 4Q-02 1Q-03 2Q-03 3Q-03 4Q-03
Source: ADI based on National Accounts data
• Following eight consecutive negative quarters, renewed growth in investment
represented a significant contribution to GDP.
Advantages of Investing Today
Following devaluation, consistent monetary and fiscal policy led
to price stability.
• 2002 inflation marked a break
with the price stability of the
previous decade and was the
result of abandoning the
Convertibility Regime,
introduced in April 1991,
establishing exchange rate
parity at $ 1= US$ 1.
• Nevertheless, following the
adjustment involving a minimal
pass-through of devaluation to
prices, a single-digit inflation
rate was once again achieved
in 2003.
Source: ADI based on Ministry of Economy data
11Advantages of Investing Today
The recovery in economic activity led to a significant increase in
jobs.
• 1,096,000 new jobs were created between 4Q 2002 and 4Q 2003.
• The albeit still high unemployment levels began to drop following the recovery in
economic activity.
è Employment Rate: Employed/ Total Population
è Unemployment Rate: Unemployed/ Economically Active Population
Advantages of Investing Today
A robust trade surplus was maintained in 2003 despite the
recovery of economic activity and a slight appreciation of the
peso in real terms.
• Export performance is highly favorable and • Imports have recovered strongly following
the upward trend is expected to continue. the drop in 2002.
12Advantages of Investing Today
The Current Account Balance has turned positive following ten
years of deficits.
• The 2003 balance is slightly down on 2002 due to a 40% rise in imports following the
economic recovery.
Advantages of Investing Today
The trade surplus and the reduction in the financial account deficit
have significantly boosted reserves
13Advantages of Investing Today
Fiscal accounts have improved substantially since May 2002, as a
result of stabilized public spending and higher tax revenues.
Advantages of Investing Today
A favorable monetary trend was established throughout 2003.
Source: ADI based
on Ministry of
Economy data
• The expansion of the broad monetary base and the issue of Central Bank Bills (LEBACs)
exemplified the continuity of a prudent and flexible monetary policy that accompanied economic
growth at no cost in terms of inflation.
14Advantages of Investing Today
The drain on deposits was halted as from 2Q 2002 , with a
positive trend from that point onwards, together with banks
recovering liquidity.
Source: ADI based on Ministry of Economy data
Advantages of Investing Today
Why invest in Argentina?
15Advantages of Investing Today
Why invest in Argentina?
ê Highly qualified population
ê Availability of natural resources
ê Modern diversified industry
ê Competitive costs and services
ê Developed infrastructure
ê Investment incentives
ê A legal framework that does not discriminate against foreign
investments
Advantages of Investing Today
A country with a highly skilled workforce
A comparison of the main education indicators reveals Argentina’s high
ranking at both regional and international level.
Illiteracy (2001) Illiteracy in Argentina
(% of population over 15 years) (% of population over 15 years)
Italy 1.5 Illiteracy in the City of Buenos
Spain 2.3 Aires, with a population similar 5.8
to Uruguay, is 0.5% and 1.3%
Uruguay 2.4
in the metropolitan region, with
Argentina 2.6 a population similar to that of
3.8
Chile 4.1
Chile.
Costa Rica 4.3 2.6
Colombia 8.1
Mexico 8.6
Latin Am. 10.8
Brazil 12.7
1980 1991 2001
Source: ADI based on UNESCO data
16Advantages of Investing Today
Education is compulsory and free for the 5-14 year age group, thus ensuring high
school enrolment rates. In addition, attendance expectancy at educational
establishments is the highest in Latin America and only one year less than that
observed for developed countries such as Spain, Italy, and the United States.
School attendance expectancy Net secondary education enrolment rate
(years) (2001)
Italy 15 Spain 94
Spain 15 Italy 91
Argentina 79
Argentina 14
Chile 75
Chile 13
Brazil 71
Uruguay 13
Uruguay 70
Mexico 12
Mexico 60
Brazil 12
Colombia 57
Colombia 11 49
Costa Rica
Costa Rica 10
Number of students enrolled in the correct age group level as a
Source: ADI based on UNESCO percentage of the total population eligible for this age group level.
data
Advantages of Investing Today
The Argentine education system is also well developed at the
higher education level.
University Students
(per 100,000 inhabitants)
• Argentina boasts a broad
Spain 3,582
network of public and
Argentina 3,123 private universities attended
Italy 3,022 by over one million students.
Uruguay 2,400 • The university student/
Chile 2,100
total population ratio is the
highest in Latin America
Colombia 1,540
and compares with the ratio
Mexico 1,490 for several developed
Brazil 1,068 countries.
Source: ADI based on UNESCO data
17Advantages of Investing Today
The strength of the education system is exemplified by the
number of scientists and engineers working in research and
development.
1,921
Scientists and Engineers working in R&D
(per 1,000,000 inhabitants)
1,128
713
533
370 323
225 219
101
Spain Italy Argentina Costa Rica Chile Brazil Mexico Uruguay Colombia
Source: ADI based on UNESCO data
Advantages of Investing Today
Availability of Natural Resources
• Argentina is characterized by the abundance and quality of its natural
resources that provide competitive advantages in developing activities
linked to these resources.
• Argentina is the eighth largest country in the world in terms of surface
area and its relevance is even greater if factors relating to the
potential its surface area offers are considered (i.e. the proportion of
surface area suitable for agriculture, mining resources, etc.).
18Advantages of Investing Today
Agriculture: Argentina has some of the most suitable
agricultural land worldwide.
The relevance of
Argentina’s
agricultural surface
area is not only due
to its size but also to
the excellent
agroecological
conditions, resulting
in high yields.
Source: ADI based on FAO data
Advantages of Investing Today
In Latin America, only Brazil has a greater surface area suitable for
agricultural use. However, if the domestic market pressure on
production in these areas is considered, Argentina has a higher
level of agricultural land available in relative terms.
Source: ADI based on FAO data
19Advantages of Investing Today
• In comparison with the major grain-producing Soybean Productivity
countries, Argentine yields are highly (Argentina =100)
competitive at international level. Argentina
Brazil
• Similar conclusions are obtained when USA
comparing yields for other crops such as apples, Australia
pears, lemons, beans, and garlic in which China
Russia
Argentina also has a considerable global market India
share. 0 50 100
Wheat Productivity
Corn Productivity (Argentina =100)
(Argentina =100)
China
USA.
USA
Argentina
India
Australia
Argentina
China
Brazil
Brazil
Australia
Russia
Russia
India
0 50 100 150 200
0 30 60 90 120 150
Source: ADI based on FAO data
Advantages of Investing Today
Agricultural production increased 105% in the period 1990-2003.
Principal crops include soybean, wheat, sunflower, and corn.
Cultivated surface area increased approximately 52% over the same
period, representing significant progress in terms of yields.
Source: ADI based on SAGPyA data
20Advantages of Investing Today
Silviculture: The availability of extensive areas promotes the
development of other activities including silviculture.
• The main factors determining competitive advantages in this activity (soil types,
climate, costs, human resources, etc.) are present in vast regions of Argentina.
• Of the 20 million hectares suitable for forestry, only 5% are currently used for this
purpose. Land suitable for forestry does not compete with other agricultural
activities.
• The diversity of climates and soil types makes it possible to cultivate a wide variety
of species.
• In addition to tree growth rates, the relatively low land value compared to countries
such as Brazil and Chile yields high rates of return and exceptional payback periods.
• High growth rates: 41 m 3 / hectare/ year (Chile 35 m3) for eucalyptus and up to
32 m3 / hectare/ year for pine (three times the growth rate in Canada and twice that
of the United States).
Advantages of Investing Today
High growth rates for conifers and eucalyptus
Conifers
Eucalyptus
Source: Simpson Timber Co., Aracruz Cellulose, Jaako Powry Investments. CIEF.
21Advantages of Investing Today
Fishery Resources: The length of its Atlantic coastline (4,725 km)
and the variety of species found in the fishing zone make
Argentina one of the best fishing areas worldwide.
Shellfish
Fish
Source: ADI based on SAGPyA
data
Advantages of Investing Today
Mining in Argentina
Ö The estimated surface area with mining potential totals approximately
750,000 km2 , 75% of which has still to be exploited.
Ö Argentina has considerable gold, copper, lead, zinc, natural borate,
bentonite, clay, and ornamental stone deposits.
Ö The effective tax rate is 41%, 6 points below the average for the principal
Latin American mining nations and almost 20 points lower than that of the major
Canadian and Australian mining regions.
Ö The regulatory framework and current mining incentive regime play a key role in
attracting investment to this sector.
22Advantages of Investing Today
The Mining Investment Law provides the following incentives:
• Double deduction of prospecting, exploration, and technical/ economic feasibility
study expenses.
• Financing and reimbursement regime for VAT on capital goods and investments in
physical infrastructure projects.
• Accelerated depreciation of capital investments.
• Exemption from import duties on capital goods and equipment, spare parts, and
accessories.
• Exemption from assets tax.
• Provincial royalties are limited to 3% of the pit-head value of mineral extracted.
• An income tax deduction of up to 5% of extraction operating costs and a tax
deduction for environmental conservation allowances.
Advantages of Investing Today
Notable growth in mineral exports
8 The transformation and integration of the Argentine mining industry into
international markets is reflected in the tripling of exports over the last seven
years.
Source: ADI based on INDEC data
23Advantages of Investing Today
Investment growth in the sector
Ö The positive impact of the new legal framework on the sector can be observed
in recent investments that rose from practically zero to over US$ 1
billion in 2002.
Ö Investment has remained robust despite the economic crisis.
Ö Leading global mining
companies including
Barrick, Homestake, BHP,
and Billiton have decided to
invest in Argentina.
Source: ADI based on CEP data
Advantages of Investing Today
Argentina ranks high internationally in terms of available mining
resources.
• The principal mining areas currently 1.China
in production include Bajo La 2. Peru
Alumbrera, El Salar del Hombre 3. Philippines
Muerto, Farallón Negro, Mina Aguilar 4. Brazil
and Cerro Vanguardia and important 5. Chile
projects involving significant 6. Argentina
metalliferous mineral reserves in 7. Mexico
various stages of exploration are 8. Bolivia
underway at locations including 9. Venezuela
Pirquitas, Agua Rica, Pascua Lama 10. Burma
and Pachón.
Source: ADI based on Mining
Journal
24Advantages of Investing Today
Substantial oil and gas reserves
• Argentina boasts substantial oil and gas reserves. Despite increased
production in recent years, investment in exploration has made it possible
to maintain significant levels of reserves.
• CONFIRMED RESERVES (2002)
– Oil: 448.4 million m3
– Gas: 663.5 billion m3
• PROBABLE RESERVES (2002)
– Oil: 179.5 million m3
– Gas: 306.1 billion m3
Advantages of Investing Today
Oil and Gas
• The oil reserves/ production ratio increased despite a 13% rise in production
during the period under review.
• Although the gas ratio decreased between 1994 and 2002, it should be pointed
out that production rose by 65.2% during this period.
Oil: Reserves/ Production ratio Gas: Reserves/ Production ratio
(years) (years)
10.6 19.8
10.2 19.3
17.8
9.2
9.1
8.9
14.8 14.5
1994 1996 1998 2000 2002 1994 1996 1998 2000 2002
Source: ADI based on Energy Secretariat data
25Advantages of Investing Today
Increased oil and gas production
• Gas production has increased constantly since the early 90s, doubling early 90s
levels in 2003.
Oil and gas production
• Although oil
(in million/ billion m³ respectively)
production has 50
fallen in recent 40
years, levels are 30
still 50% above the
20
levels recorded 12
10
years ago.
0
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03
Oil Gas
Source: ADI based on Energy Secretariat data
Advantages of Investing Today
A Sustainable Environment
• The availability of vast areas with
Environmental Sustainability Index 2002
optimal environmental conditions is
1 Finland 73.9
2 Norway 73.0 clearly a significant factor in attracting
3 Sweden 72.6
investment .
4 Canada 70.6
5 Switzerland
66.5 • Argentina ranks 15 among 142
6 Uruguay 66.0
7 Austria 64.2 countries in the University of
8 Iceland 63.9
Colombia environmental
9 Costa Rica 63.2
10 Latvia 63.0 sustainability rankings.
… 62.2
15 Argentina 61.5 • Only Costa Rica and Uruguay rank
16 Australia 60.3
higher in Latin America. In terms of
17 Panama 60.0
18 Estonia 60.0 surface area worldwide, Argentina
19 New Zealand 59.9
20 Brazil 59.6 ranks second behind Canada.
26Advantages of Investing Today
Modern diversified industry
Capital Formation (2004)
• Argentina boasts a relatively modern and
diversified industrial structure. There has been Financial
Services
substantial investment in machinery and 1%
Extractive
equipment in recent years and a nucleus of Activities
state of the art companies has emerged. 27%
Industry
• In addition, Argentina’s industrial profile is 42%
characterized by:
Trade and
– Pronounced alignment with Argentine Services
11%
factor endowment
Infrastructure
– High labor productivity indices 19%
– High capital intensity
Source: ADI based on CEP data
– Export-oriented production
– Increases of scale The recovery is currently being boosted by
new investment, with flows aimed at
– Transnational enterprises
industry and other tradable goods sectors
playing a dominant role.
Advantages of Investing Today
Relatively higher prices for domestic products favor the production
of tradable goods, resulting in a higher industrial sector share in
GDP.
• The industrial sector is one of the pillars of the current economic recovery and growth in
production is the result of higher exports as well as import substitution.
• Sectors that were internationally competitive in the 90s (petrochemicals, iron and steel,
foodstuffs) reacted favorably, while other previously relegated industries (textiles,
metalworking) led the recovery in the industrial sector.
Sector Share in GDP at current prices
Manufacturing Industry Services
22.3% 65.1%
63.5%
62.3%
18.2% 18.2% 61.1% 60.8%
17.0%
17.2%
16.1% 50.9%
1993 1995 1997 1999 2001 2003 1993 1995 1997 1999 2001 2003
27Advantages of Investing Today
A modern diversified industrial sector integrated into the global
market
Economic opening has transformed the industrial sector, resulting in:
• A greater emphasis on exporting: Manufactured goods exports have increased their share
of industrial GDP.
• Increased international integration: Intermediate goods imports have increased their
share of industrial GDP.
Intermediate Goods Imports/
Industrial GDP
Exports / Industrial GDP 22%
80%
18.9% 21.6%
70% 20%
60%
26.5% 18%
50% 16.2%
40% 16% 17.4% 17.0%
30% 8.5% 34.2%
14%
20% IM
10% 12%
0%
11.4% AM 11.8%
1993 1995 1997 1999 2001 2003 10%
1993 1995 1997 1999 2001 2003
Source: ADI based on INDEC and National Accounts data
Advantages of Investing Today
The industrial sector displays continuous improvement in human
resource productivity.
• Argentina has recorded significant progress in human resource productivity with a
26% increase in labor producivity between 1995 and 2000.
Industrial sector hourly productivity
(1997 =100) The relative labor productivity
120 gap with the United States is the
115
lowest in Latin America.
110
105 According to ECLAC statistics,
100 average Argentine industrial
95
90 sector labor productivity is 67%
85 of US levels, with Brazil at 37%,
80
and no other Latin American
III-01
III-02
IV-01
IV-02
III-00
II-00
II-01
II-02
I-00
IV-00
I-01
I-02
I-03
1998
1995
1996
1997
1999
country higher than 40%.
Source: ADI based on INDEC data
28Advantages of Investing Today
A modern, diversified, and growing industrial sector
• Industrial production has developed favorably in recent months. The recovery in
domestic demand, the integration of Argentine world class producers of industrial
inputs and primary commodities into external markets is intensifying, accompanied by a
new process of import substitution in specific branches.
Non-seasonally adjusted Monthly Industrial Estimator (MIE)
(Base Year 1997=100)
105
100
The MIE is currently at its
95
highest level for the last
90
three years.
85
The cumulative increase
80
from January 2002 to
75
February 2004 is 35%.
70
Jul-02
Jul-03
Mar-02
Sep-02
Sep-03
May-02
Nov-02
Nov-03
Jan-02
Jan-03
Jan-04
Mar-03
Mar-04
May-03
Source: ADI based on INDEC data
Advantages of Investing Today
There has been growth in all industrial sectors in recent months.
2003 average vs. 2002 average • Of the industrial sectors currently
% variation
Textiles 75 displaying increased growth, special attention
Metalworking 56 should be drawn to the metalworking
Cotton yarn 53 industry, textiles, editing and printing
Cement 31 products, agrochemicals, construction
Other construction materials 30
materials, and other foodstuff and drinks
Editing and printing 23
sub-sectors.
Glass 20 • Only one of the 30 categories comprising
Pharmaceuticals 19 the MIE recorded a lower performance vis-à-
Industrial gases 18 vis the previous year.
18
Agrochemicals • Industrial growth in recent months has
17
Tires been generalized, irrespective of the various
Basic chemical prods 17 branches’ specific orientation (domestic
Sugar 16 market, import substitution, or exports).
Source: CEP based on INDEC data
29Advantages of Investing Today
Argentina is among the most competitive economies in the
international market in terms of labor costs.
• Some of the basic costs investors must take into consideration if they wish to
set up their business in Argentina are listed below.
Gross annual wages/ salaries by sector
(2003, in US$)
Financial 9,628
Intermediation
Manufacturing
Industries 5,509
Logistics and
5,515
Communications
Trade 3,648
Construction 3,276
Hotels and
2,589
Restaurants
Source: ADI based on Ministry of Economy and Production data
Advantages of Investing Today
Skilled labor costs for Buenos Aires are competitive vis-à-vis
other cities worldwide.
• Comparing City of Buenos Aires local labor costs with costs in other major urban
centers reveals that Argentine costs are highly competitive.
Annual gross salary for engineers Annual gross salary for industrial skilled
Annual gross(2003,
salaryinfor
US$)
engineers workers (2003, in US$)
Annual gross salary for industrial skilled workers
(2003, in U$S) (2003, in U$S)
Mexico City 9.000 Mexico City 3.600
Prague (Czech
MexicoRep)
City 10.200
9,000 Bogota 4.100
Mexico City 3,600
Buenos Prague
Aires (Argentina)
(Czech Rep) 10.500
10,200 Shanghai 4.600
Bogota 4,100
Buenos Aires (Argentina)
Shanghai (China) 12.100
10,500 Buenos Aires 5.100
Shanghai 4,600
Shanghai (China)
Sao Paolo (Brazil)
12,100
13.400 Sao Paolo
Buenos Aires 6.500
5,100
Sao Paolo (Brazil) 13,400
Bogota (Colombia) 14.400 SaoPrague
Paolo 6.800
6,500
Bogota (Colombia) 14,400
Caracas (Venezuela) 14.900 Lima
Prague 6.800
6,800
Caracas (Venezuela) 14,900 6,800
Santiago (Chile) 15.500 Santiago
Lima 8.300
Santiago (Chile) 15,500
Santiago 8,300
Lima (Peru) 16.800 Caracas 10.700
Lima (Peru) 16,800
Caracas 10,700
Singapore
Singapore 26.700
26,700 Milan 16.100
Milan 16,100
Milan
Milan(Italy)
(Italy) 32.200
32,200 Singapore 17.000
Singapore 17,000
Sidney
Sidney(Australia)
(Australia) 32.400
32,400 Barcelona 17.700
Barcelona 17,700
Barcelona(Spain)
Barcelona (Spain) 32.400
32,400 Sidney
Sidney 18.400
18,400
Miami
Miami (U.S.A.)
(USA.) 54.000
54,000
Miami
Miami 40,90040.900
Source: UBS
30Advantages of Investing Today
Buenos Aires also offers clear advantages over the rest of the
world in terms of cost of living.
Food basket Services basket
(2003, in U$S) (2003, in U$S)
Buenos Aires 153 Buenos Aires 136
Prague 164 Sao Paolo 162
Bogota 186 Prague 164
Santiago 207 Bogota 165
Lima 228 Caracas 183
Sao Paolo 230 Mexico City 202
Mexico City 246 Shangai 206
Caracas 276 Santiago 207
Sidney 349 Lima 208
Barcelona 351 Singapore 248
Shangai 359 Barcelona 270
Miami 377 Sidney 327
Singapore 417 Miami 348
Milan 422 Milan 355
A basket of 39 products with due consideration A basket of 19 services including telephone, post
of the preferences of Western European office, hairdressing, cinema, restaurant dining, dry
consumers was taken as a reference. Source: UBS cleaning, etc. was taken as a reference.
Advantages of Investing Today
Competitive costs for agricultural land combine with excellent
agroecological conditions that ensure high yields in the widest
variety of crops.
12
10
Argentina = 1
8
6
4
2
0
Belgium
Canada
Argentina
Germany
Australia
Holland
U.K.
Spain
USA
New Zealand
Source: ADI
31Advantages of Investing Today
Availability of office space at low rates
Monthly rental rates (Class A offices) Class A buildings:
(2003, in US$ per m²) Buildings generally used for
rental purposes.
Bogota
7.5 Located in easy access areas.
(Colombia)
Buenos Aires Modern layouts with good
8.0
(Argentina) natural light and view. Well
Santiago (Chile) 11.5 finished and maintained.
Tenants are generally
Rio de Janeiro
14.5 multinational companies and/
(Brazil)
or tenants with a high
Montevideo
14.9 economic capacity.
(Uruguay)
Mexico City 21.0
Source: ADI based on Colliers, Castro, Cranwell & Weiss data
Advantages of Investing Today
Low-cost electric power for industry
Electricity rates for industrial users
(2002, in US$ per MWh)
Argentina 19.3
Spain 31.2
Chile 36.8
Brazil 36.9
Colombia 55.0
International average 57.6
U.K. 59.1
Italy 98.7
Source: Electricity Association
32Advantages of Investing Today
Low-cost gas for industry
Rates for major industrial users
(2003, in US$ per m³)
Argentina 0.02
Uruguay 0.11
Mexico 0.22
International average 0.25
USA 0.28
Italy 0.29
Canada 0.31
Chile 0.45
Source: ADIGAS
Advantages of Investing Today
Competitive telecommunications costs
Local call rates
(2002, in US$/ 3 minutes)
Argentina 0.03
Brazil 0.03
Spain 0.09
Italy 0.12
Chile 0.12
Mexico 0.14
Uruguay 0.17
International average 0.21
Source: International Telecommunication Union
33Advantages of Investing Today
Developed infrastructure
• Argentina boasts considerable development in terms of road, rail, port,
aeronautical, and telecommunications infrastructure.
• In addition, modern regulatory frameworks ensure a high level of
competition.
• Appropriate infrastructure provides a platform to boost production sector
competitiveness and ensure territorial and social integration .
Advantages of Investing Today
Commercial Aviation infrastructure
• The National Airports System comprises 52 airports, 35
of which are managed by the private sector in
conjunction with recognized international operators.
• Argentina has 21 airports equipped for international
traffic (see map).
34Advantages of Investing Today
Port infrastructure
• Argentina has 38 maritime ports along the Atlantic
coastline and 25 river ports.
• Recognized international maritime cargo operators
operate out of Argentina.
• The Port of Buenos Aires is the main container port in
Latin America and the Caribbean.
• Argentina’s principal maritime and river ports are featured
on the map.
Advantages of Investing Today
Port Infrastructure
• Argentina’s main port has achieved considerable progress in recent years in
terms of operability.
CATEGORY 1991 2001
General cargo (thousands of tons) 4,000 6,957
Containers (thousands of TEUs) 300 650
Operating area (hectares) 65 92
Average lay days 6.2 1.0
Productivity tons/ personnel/ year 800 5,984
Source: Port of Buenos Aires
35Advantages of Investing Today
Paraguay - Paraná Waterway
• The Paraguay-Paraná Waterway is the main river transport lane along the Paraguay-
Paraná water system and measures 3,302 km in length.
• The importance of this project lies in the lower river navigation costs (the approximate
freight cost is US$ 0.010 per ton/ km) and the lower environmental impact.
• Hidrovía S.A. is responsible for dredging to a draft depth of 32 feet, seamarking, and
maintaining the main access channel to the River Plate and the River Paraná for the 779
km stretch to the port of Santa Fe.
• The waterway is navigated by tug-propelled barge convoys, each barge with a loading
capacity of 1,500 tons. Currently, the maximum convoy is generally 20 barges (30,000
tons) measuring approximately 300 meters between perpendiculars with a 48 meter beam.
Advantages of Investing Today
Road Infrastructure
• The National Road Network spans 38,632 km,
81% of which are paved (see map).
• A further 180,000 km of roads are under
provincial and 280,000 km under municipal
jurisdiction.
36Advantages of Investing Today
Railway Infrastructure
• The Argentine railway network is one of the most
extensive worldwide, covering a distance of 35,753 km.
• The federal government has decided to promote regional
integration though the railway system and consequently
decreed the reopening of branch lines such as the
Central Trans-Andean Railway via tender and the
rehabilitation and transformation of the Belgrano Cargas
freight line.
Advantages of Investing Today
Telecommunications
Argentina began developing telecommunications 123 ago, only 4 years following the
launch of the Bell Telephone Company.
Over the last 10 years, investments totalling more than 20 billion dollars have
increased the number of telephone lines in service by 74%, total digitalization of the
network has been achieved, and the mobile telephone service has grown from less
than half a million to 8 million phones in service.
PER 100 Latin Am.
Argentina Brazil Mexico
INHABITANTS & Carib.
Telephone lines 22.0 18.2 12.5 14.8
Cellular phones 16.9 13.7 14.2 12.2
PCs 9.1 6.3 6.9 5.9
Internet users 8.8 4.6 3.7 5.0
Source: World Bank (2001)
37Advantages of Investing Today
Telecommunications
• Various indicators give an overview of improvements in the telecommunications
sector in recent years.
CATEGORY 1990 2000
Lines installed (thousands) 3,097 7,894
Cellular phones (thousands) 15 6,380
Digitalization of network 13% 100%
Lines in service per 100 inhabitants 11.9 20.6
Public telephones (thousands) 22.5 150.7
Lines in service per employee 76.1 406.9
Investment in the sector 1991-2000 US$ 21,150 million
Source: National Communications Commission
Advantages of Investing Today
Telecommunications
Telephone lines in service
(in millions)
8.5 8.6 8.7
7.9
7.1 7.2
6.8
6.3
5.7
5.0
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03
Source: National Communications Commission
38Advantages of Investing Today
Telecommunications
Cellular telephone lines
(in millions)
7.8
6.7 6.6
6.4
3.9
2.7
2.0
0.7
0.2 0.3
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03
Source: National Communications Commission
Advantages of Investing Today
Investment Incentives
• Argentina has a number of regimes designed to promote investments by both
domestic and foreign investors alike:
– General incentives: Instruments and measures aimed at promoting
investment in any region or economic activity
– Sectoral incentives: Promotion regimes aimed at a particular economic
sector
– Regional incentives: Provincial investment promotion regimes and
investment support infrastructure
39Advantages of Investing Today
General Incentives
• Export promotion incentives including drawback, temporary admission, turnkey
plant exports, and customs-at-factory regimes.
• Instruments and regulations aimed at reducing initial investment costs: investment
VAT financing; reduced VAT tax rate on capital goods, IT, and telecommunications;
zero import tariff on capital goods; zero tariff on all goods destined for use in
major investment projects.
• Measures that boost competitiveness by reducing operating costs, such as
deregulation of the electricity market, air freight transport, etc.
Advantages of Investing Today
General Incentives
• The Executive Branch has proposed new mechanisms designed to promote
investment and these mechanisms are currenly being analyzed by Congress:
– Accelerated depreciation for machinery, equipment, and infrastructure works
destined for investment projects. Capital goods purchases may be depreciated in
the balance sheets for the three years subsequent to purchase and infrastructure
project depreciation will be reduced by 50% vis-à-vis the usual depreciation period.
– Refund of VAT paid on the purchase of goods destined for use in investment
projects. All VAT not offset will be refunded in cash three months after purchase.
– The regime will remain in effect for 36 months.
40Advantages of Investing Today
Sectoral Incentives
• Certain sectors including mining, forestry, tourism, and the automotive industry have
specific investment promotion regimes.
• Some of these regimes include the following incentives inter alia:
– Fiscal stability for 30 years (forestry, mining)
– Special depreciation regime for income tax purposes (forestry, mining)
– Tax exemptions (forestry, mining, tourism, automotive industry)
– Compensated trade regime (automotive industry)
Advantages of Investing Today
Regional Incentives
• Various provinces in Argentina have investment promotion regimes that generally
include the following incentives:
– Exemption from provincial taxes such as turnover tax, stamp duty, real estate
tax, etc.
– Reduced public utility rates
– Support for infrastructure and equipment projects
– Facilities for the purchase, rental, or lease without charge of public property
• Most provinces have business support infrastructure such as industrial parks and
free zones.
41Advantages of Investing Today
Legal Framework
• Removal of barriers to foreign investor acess to specific economic sectors
• The main aspects of the current legal framework with regard to FDI are based on:
– National treatment for foreign investors
– No prior approval or registration requirement for investments
– Access to all economic sectors
– Access to domestic incentive programs
– Unimpeded transfer of profits and repatriation of capital
• Protection and arbitration of disputes between Argentina and foreign investors
• Argentina maintains bilateral agreements for the promotion and protection of
investments (BITs) and is a member of MIGA, OPIC and ICSID.
Advantages of Investing Today
Attractive Sectors for
Investment
42Advantages of Investing Today
Attractive sectors for investment
• The following include some of the most attractive sectors for investment:
n Mining
n Forest industry
n Leather and leather products
n Petrochemical industry
n Agricultural machinery
n Vegetable oils
n Grape growing and wine
making
n Cultural industries
n Software
n Outsourcing
n Tourism
Advantages of Investing Today
Mining
Rates of return after taxes
(gold mine)
S. Africa
4Strong increase in production Chile
Argentina
4Exports tripled in the last 7 years (US$ 996 Australia
millon in 2003) USA
Peru
4Strong foreign investment in the last 6 years Bolivia
(US$ 3 billion) Canada
Mexico
4Favorable legal framework China
4Geological potential: rich in mining resources 0 5 10 15 20
(ranked sixth worldwide) Rates of return after taxes
(copper mine)
475% territory with potential still unexplored Chile
4Mining Integration Treaty with Chile
Argentina
S. Africa
4High profitability in copper and gold mines USA
Australia
4Availability of production resources: Peru
infrastructure, skilled labor and a growing China
supply of local suppliers
Bolivia
Mexico
Source: Colorado School of Mines è Canada
0 5 10 15 20
43Advantages of Investing Today
Forest Industry
PAPER INDUSTRY
• The Forestry Law provides an attractive legal
• Unmet domestic demand
framework for investments
• Growing per capita consumption
• Fiscal and economic incentives for the
development of the sector WOOD INDUSTRY
• High growth rates and lower harvesting • New project potential
maturities • Cost of wood lower than in Nordic countries
• Abundant supply of suitable low-cost land • High expansion potential due to relatively low
and extensive tracts available consumption
• 20 million hectares of suitable virgin land,
only 5% of which is currently being Productivity per worker in paper and paper
cultivated product production
(1993=100)
• High potential for industrial development
200
• PULP INDUSTRY
150
• Abundant supply of forest raw material 100
• Extensive use of recycled fibers with definite 50
growth potential 0
93 94 95 96 97 98 99 00 01 02
Source: CEP
Advantages of Investing Today
Leather and leather
products
The sector produces tanned leather, semi-
The largest firms produce up to 5,000/6,000
finished and finished leather, and upholstery
pelts per day (in Italy average-sized companies
covers with an annual turnover of US$ 1
produce approximately 200/300 pelts per day).
billion.
The industry is moving forward in terms of
Argentina is the world’s fourth largest producer
upstream integration, basically by producing
and exporter of leather goods and claims 9%
upholstery covers for the automotive industry
of the global leather market.
(US$ 200 million in exports).
80% of total production is exported and 50%
of these exports go to the USA, China, and
Brazil.
Production has increased notably in recent Productivity per man hour
years. (1993=100)
Productivity per worker 180
(1993=100)
130
180
80
130
30
94
01
93
95
96
97
98
99
00
02
80
30 Source: CEP
94
97
00
01
93
95
96
98
99
02
44Advantages of Investing Today
Petrochemical Industry
The petrochemical industry has been operating for more than fifty years in Argentina and
petrochemical plants process and add value to raw materials in the form of locally extracted
hydrocarbons (oil derivatives and natural gas compounds).
43 plants with installed capacity on an international scale
Urea production
produce primary, intermediate, and final products, and in
(in thousands of tons)
the five-year period 1996-2000, the petrochemical industry 1,200
invested approximately US$ 3 billion and doubled its 1,000
800
installed capacity to 6.2 million tons per annum.
600
400
Demanding domestic market: one of the most notable 200
examples is the increase in apparent consumption in the 0
agricultural sector. 92 93 94 95 96 97 98 99 00 01 02
The industry has the potential to become a production Productivity per worker
(1993=100)
platform to supply MERCOSUR markets. 300
250
200
Human resource productivity in the manufacture of 150
chemical products for agricultural use has practically tripled 100
in 10 years. 50
0
93 94 95 96 97 98 99 00 01 02
Advantages of Investing Today
Agricultural Machinery
This sector has been industrially active for over 100 years and has the capacity to adapt
to changes in agricultural practices (e.g. the adaptation of seeders to the direct seeding
system).
Argentine seeder production statistics
1990 3,278
n An ever-expanding and important domestic 1991 2,562
1992 2,080
market: Agricultural production is displaying marked
1993 3,100
growth, while current profitability allows producers 1994 3,600
to procure suitable equipment. 1995 3,400
1996 5,880
n The industry is able to support domestic
1997 4,740
purchasers in the post-sales phase. 1998 4,640
n National equipment can be adapted perfectly to 1999 4,178
Argentine soil characteristics. 2000 3,894
2001 3,420
n Applied knowledge export potential.
2002 5,100
2003 5,350
45Advantages of Investing Today
Vegetable Oils
• SOYBEANS:
• Argentina’s prominence in the global market:
èAverage production unit capacity: 5,000 tons
è 12% of global soybean production Principal global producers: USA (1,500 tons),
è 30% of vegetable oil exports and 10% of Brazil (2,500 tons)
seed exports èCrush cost US$ 4/ ton (USA –US$ 10-, Brazil
è 22% of global sunflower production -US$ 14-)
è Leading exporter of sunflower oil • A high incidence of leading-edge technology in use
in the industrial sector
• GPV: US$ 4.2 billion
• Capacity to produce bio-fuels from vegetable oils
• Low cost of arable land
• High geographic concentration of primary and
Soybean oil exports
industrial production (in millions of US$)
• Availability of futures markets for agricultural
2000
producers 1500
• Growing global demand for vegetable oils and 1000
500
vegetable oil by-products
0
92 93 94 95 96 97 98 99 00 01 02 03
Source: INDEC
Advantages of Investing Today
Grape Growing and Wine
Making
• Argentina is the world’s fifth largest producer of • High availability of raw materials: eighth
wine largest global producer of fresh grapes
• High domestic consumption (world’s sixth largest • High competitiveness of Argentine wine
consumer of wine) producers: excellent price/quality ratio
• Argentine wine exports have risen by more than
• Low cost of land in the context of a global
400% in the last ten years
reduction in planted area
• High quality wines account for over 80% of
exports in this sector • Available technology similar to that used by
the major producing countries
Argentine wine exports • Capacity to export high-value wines amid
(in millions of US$)
180 growing foreign demand
150
• Capacity to produce organic products
120
90 • Ongoing improvement in the quality of grape
60
and wine products
30
0
92 93 94 95 96 97 98 99 00 01 02 03
Source: INDEC
46Advantages of Investing Today
Cultural Industries
• The book industry was one of the first to develop in Latin America, while there is also a long history
of film production.
• Cultural industry professionals and technicians are high-quality, and human resources working in
these industries display a high degree of flexibility in adapting to work-related developments and
adverse scenarios.
• A large number of training centers are available for professionals in the various specialist fields
covered by these industries.
• Argentina boasts talented writers, musicians, actors, authors, scriptwriters, directors, and advertisers
of world renown.
• High-level equipment in graphic design, film studios, television and music production ensures high-
quality productions.
• Argentine cinema is always represented and performs well at international film festivals, and
Argentina was among the top five creative leaders worldwide in advertising in the 90s.
• Argentina has a wide variety of landscapes and locations suitable for filmmaking, and a good tourist
infrastructure and transport system makes it easy for television, cinema, and advertising production
teams to stay in and move around the country.
Advantages of Investing Today
Software
• Human Capital: highly trained, specialized • Low production costs: the cost structure for
in technology and IT solutions at competitive this sector is highly competitive internationally
costs, with socioeconomic and cultural • Argentina: A highly competitive base for
characteristics similar to those in the most producing and exporting software and IT
highly developed countries services to Latin America and the Spanish-
è 3,500 computer and IT graduates/ year speaking world
è 20,000 AMBA professionals • Legal framework: Software Development Bill:
• Potentially significant domestic markets è Fiscal stability
for specific applications: è Extrazone import duty exemption for
è Agribusiness, industrial automation, hardware imports
educational and entertainment software
è Income tax reduction in the amount of
(edutainment)
a percentage to be investe in R&D
• Exportable software development
è VAT credit
capability
47Advantages of Investing Today
Outsourcing
• Argentina is in a position to become one of the main beneficiaries of this growing corporate
trend. Various multinational companies (HP, IBM, Teleperfomance, SAP, Motorola, Accenture)
have selected Argentina as their base for operations ranging from basic services (such as
telemarketing or call-centers) to software development, engineering, financial analysis, design,
and R&D.
• The main reasons for Argentina’s attractiveness are the level of qualification of the population,
the critical mass of professionals and university students, labor cost levels, and
telecommunications infrastructure availability.
“Proficiency in English” examination
"
(% of successful candidates)
70
• Potential to provide the US market with 60
call center services. A growing number of 50 global average:
Argentines are training and qualifying in 40
46%
English. Qualifications obtained abroad 30
No data
available: less
by Argentine students are among the 20
than 40
candidates
highest. 10
0
Chile Brazil Uruguay Argentina Italy Spain
Source: University of Cambridge, EFL
Advantages of Investing Today
Tourism
• The number of foreign tourists visiting Argentina rose
Hotel supply:
by 27% in 2003 compared to a 15% increase in
Number of establishments
2002. 7,800
• Foreign tourism displays a high degree of diversity in 7,500
terms of countries of origin and average spending, 7,200
accompanied by longer average stays.
6,900
6,600
• There has been strong investment in hotel 6,300
infrastructure in recent years, although there are still 1998 1999 2000 2001 2002
a considerable number of locations available for
developing tourist services. Tourist countries of origin
2003
• Skilled labor is low-cost and tourist tariffs are
Others Brazil
attractive. 13% 17%
• The diversity of Argentine landscapes makes it Uruguay Chile
26% 17%
possible to tailor products to international demand
USA & Europe
(ecotourism, rural tourism, cultural tourism, sport Canada 17%
10%
tourism, etc.).
Source: INDEC
48Advantages of Investing Today
Perspectives and Challenges
Advantages of Investing Today
Market expectations consensus: improved Argentine economic
performance
Market Expectations Survey
GDP 2004 7.2% Industrial Activity 2004 11.0%
(Interannual variation) 2005 4.8% (Interannual variation) 2005 7.5%
Nominal Exchange Rate End 2004 2.97 Investment 2004 23.0%
($/US$) End 2005 3.00 (Interannual variation) 2005 11.5%
Consumer Prices Dec 04 6.9% Trade Balance 2004 13.0
(Interannual variation) Dec 05 6.0% (US$ billion) 2005 12.3
Average Salary 2004 10.5% Current Account Balance 2004 5.1
(Interannual variation) 2005 8.0% (US$ billion) 2005 4.1
Unemployment Rate 2004 13.5% International Reserves 2004 17.1
(% of Workforce) 2005 12.4% (US$ billion) 2005 18.8
Source: BCRA
This survey is conducted by the Central Bank of Argentina to obtain a systematic follow-up of the
principal short- and medium-term macroeconomic projections made by Argentine and foreign analysts
and academics on Argentine economic performance.
49Advantages of Investing Today
Argentina will be among the leading countries in Latin America
in 2004/ 2005 in terms of growth.
Source: World Economic Outlook (IMF)
• Argentina recorded the highest growth in Latin America in 2003 and is expected to continue to
be among the leaders in the years to come.
Advantages of Investing Today
On the domestic front, Argentina aims to intensify the current
economic growth process
• To achieve this goal, Argentina must ensure continuity in the
processes already underway:
– Lowering unemployment
– Boosting investment flows
– Strengthening the financial system
– Fiscal consolidation
– Restructuring the social security system
– Stabilizing prices
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