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Course: Business Environment

Assignment No : 4

Batch : 2010-12

Section : E

Group No. : 1

Country : Argentina

S.N. Name Roll No.

1 Saurabh Kumar 2010209

2 Shashank Shekhar Tripathi 2010213

3 Shilp Jain 2010214

4 Swati Das 2010237

5 Sumeet Gupta 2010233

6 Vinod Kumar 2010255

Words : 500

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Di i f B P

T

The Argentine economy in the l te 1990s was in an unstable condition and growth washampered by rising debt and inflation. To counter this problem, the then government

deployed measures in the form of increased Argentina trade and exports. However, inflation

rates are still high and are an impediment to the countrys overall economic development.

Argentinas trade surplus, as of May 2009, rose 139% from the 2008 levels to $2.48 billion

due to a sharp drop in imports, in the wake of the economic meltdown. The overall exports

dropped by 18% in May 2009 to $5.14 billion, while imports fell by 49% to $2.66 billion.

The export slump was attributed to lower prices of grains and oilseeds. While the volume

increased 6%, export prices fell by 13%. The imports plunged 39% in volume and 16% of

value. Purchases of foreign made and capital goods shrankin May 2009. The trade surplus in

the first five months of 2009 was $8.33 billion, up by 63% from $5.12 billion in the first fivemonths of 2008. In January 2010, Argentinas trade surplus reached $1.22 billion. While

exports rose 19% to $4.42 billion in the month due to rising industrial manufacturing sales,

imports rose by 16% at $3.21 billion. Trade surplus of 513 Million USD reported in January

2011.

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Current Account

Argentina reported a current account surplus equivalent to 900 Million USD in the third

quarter of 2010. Growth in foreign trade, especially trade with MERCOSUR partners, has

been one ofthe main factors driving the Argentine economy. Argentine exports are mainly of

the agriculturaltype: soybean products, cereals, beef; motor vehicles and parts, chemicals and

medicine. Argentina is a major importer of industrial and computing machinery and parts,

industrial supplies, automobiles and other consumer durables and refined fuels and lubricants.

Capital Account

The Net capital account (Balance of Payments; US dollar) in Argentina was reported at

362062000.00 in 2008, according to the World Bank. Net capital account includes

government debt forgiveness, investment grants in cash or in kind by a government entity,

and taxes on capital transfers. Also included are migrants' capital transfers and debt

forgiveness and investment grants by nongovernmental entities.

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In view ofthe liberalization oftrade policies and the real appreciation ofthe peso, the current

account deficit deteriorated sharply since 1990. This was more than offset by a large influx offoreign capitalthat was enticed by the government's new economic program. Since 1991, the

decline in interest rates internationally and the lack of attractive alternatives for foreign direct

investment helped to generate a massive inflow of foreign capital, much of which was

actually owned by Argentines but held abroad.