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Argentina: Economic Outlook for 2021 and 2022

Argentina was hit hard during 2020 by the Covid-19 pandemic and a new series of demand-side shocks that have pummeled an already struggling economy. Argentina has reported over 40,000 confirmed deaths from Covid-19. With inflation nearing 40% and its Central Bank short on dollars, Argentina is facing renewed pressure to devalue its currency. President Alberto Fernandez and his government are also working to renegotiate $44 billion in loans the country owes the International Monetary Fund. Nearly a third of the country’s workforce is unemployed or has given up on finding work. But, despite the constraints it faces, Argentina’s government has tried to implement policies to help citizens stay at home and contain the spread of the coronavirus. According to Martin Guzman, the country’s Finance Minister, “In a crisis in the context of a pandemic, the state plays an important role to protect the most vulnerable and co-ordinate actions to maintain stability — but that is a role that will no longer be necessary in an economy that has restored macroeconomic stability.” After reporting negative growth in 2018 and 2019, Argentina’s economy is expected to record a double-digit contraction in 2020. With the right stewardship, however, Argentina is expected to report positive growth in 2021 and 2022. So far, 2020 and 2021 have been tough years for Argentina. But, President Fernandez has a chance to implement reforms to create opportunities for renewed investment, job creation and economic growth. Foreign executives and investors looking at Argentina need to do extensive due diligence to understand the country’s political risk dynamic and outlook.


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