Argentina’s economic policies have resulted in a highly distorted economy with persistently high inflation and a massive fiscal deficit. Businesses and consumers are constrained by a series of trade, financial, capital, price, and foreign exchange controls. The country’s current program with the International Monetary Fund requires fiscal discipline in order to receive disbursements, necessary to mitigate the impacts of economic volatility. However, political discord among the government affects market confidence and growth estimates, especially in a presidential election year.
Additionally, in an effort to protect domestic production vis-à-vis imports and preserve its foreign exchange reserves, the Argentine government has imposed import barriers and regulatory burdens that adversely affect foreign products and services. Importers experience severe delays of licenses to import intermediate goods, inputs, and services, and face strict limitations on their ability to access foreign currency to make international payments.
Current global events also affect the Argentine market with the Russian invasion of Ukraine affecting the prices related to international logistics services as well as agriculture and energy commodities. The Argentine market was affected by a severe drought, decreasing its agricultural exports and, as a result, hindered the country’s ability to increase its revenues and reserves.
Other business challenges include persistent and systemic corruption, a lack of regulatory coherence, weak intellectual property rights protection, inefficient customs and legal processes, poor infrastructure, costly labor, and the limited availability of financing.