Argentina's Economic Recovery

Argentina, along with much of Latin America, suffered an economic downturn during the 1980s. However, with the Menem administration (elected in the late 1980s), the country undertook a series of economic reforms designed to bring the country out of its economic doldrums and into a new era of prosperity. Many of those reforms had the desired effect so that by 1994, the country had seen its economic situation improve dramatically; this was reflected in the nation's financial markets. The nation suffered an economic recession in 1995, but further steps taken by the government have strengthened the economy to the point that by 1996, performance had returned to 1994 levels. Argentina endured a recession during 1994 and 1995, but its long-term economic performance is expected to be strong. This research considers the economic recovery that the nation enjoyed during the early 1990s and the outlook for the Argentinean economy in coming years.

Argentina's Economic Situation in the 1980s

When President Carlos Saul Menem delivered his inaugural address in 1989, his country was facing hyperinflation and a loss of confidence by world economy's in the country's nearly bankrupt government. As a region, Latin America had external debt of $26 billion with 75 percent of that amount owed by only five nations: Argentina, Brazil, Chile, Mexico and Venezuela. Overall economic growth for the region had dropped to nearly zero, and per capita gross domestic product (GDP) had d

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for the formerly state-run natural gas distribution system). Ford began and completed construction of an automobile parts assembly plant, and Japan's NEC corporation entered into a telecommunications joint venture with one of Argentina's largest industrial groups (Perez Companc) (Sharlach 27). By the end of 1993, total deposits in Argentina grew from $8 billion in 1991 to more than $36 billion. This increase reflects the growing investor confidence in the strategies undertaken by the government, and spurred additional growth in other sectors of the economy. The privatization process begun in the early 1990s continued to grow during the mid-1990s with the result that the nation now has a private telephone system, an entirely private oil sector, private natural gas production and private transportation network. More than 10 new companies were participating in the largely privatized electricity generation and distribution sector by the end of 1993, and more than 50 new companies in all were formed by that time which required new debt and equity, and which created demand for corporate financial services. Perhaps most significantly, inflation had dropped to below one percent (Woodyatt S44). Central to the economic reforms that

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