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Argentina’s booming economy

by Neil Rushen

Hello from Argentina! I`ve decided to pop a few articles together to give you a few reasons to consider moving to Argentina, starting with the economic outlook out here.

Over the next few weeks when I can put time aside from my busy social life we`ll be looking at the social scene, schooling and education, healthcare, retirement and why you can`t get good curry powder here! Thanks to John and Annette who visited recently I`ve just had my first pint of Marstons Pedigree! Still not enough of a reason to return to the UK.

Here`s one of the reasons I choose to call Argentina, and Mendoza in particular, home. Information in this article appeared in the Los Andes Rumbus magazine (issue 106, page 30) and is attributed to information released by the Secretary of agriculture, livestock, fishing, food and grapes in the Economic Ministry.Resurgence of Regional Economies

Argentinean economic recovery is based on the recovery of regional economies. All provinces in Argentina currently show signs of growth. In the last 2 years different sectors of economic activity from agriculture to industry have taken off, leaving behind times of crisis. The central provinces of Argentina (that’s us!) currently lead growth and exportation as well as 25% of all new businesses. In the central provinces, cereals, meat, car production, honey, fruit and grape products show a record recovery. In Patagonia in the south wool, fishing and electrical goods are leading growth. People are actually moving back to campos and fincas abandoned in the 90s.

The Mendoza province, which is the principle producer of quality wines, was the main contributor to a growth of 36% in wine exports last year. It`s also an area of booming tourism, the first 3 months of this year showing an increase in tourism of 14% over the same period in 2004, well above the national increase.

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The agro industry of Argentina has become the engine of the growth of the national economy. Argentina has become the 8th largest producer and 7th largest exporter of food products. 56% of Argentinean exports belong in the agricultural industry, which is also the sector which has created most employment in the last few years.

Tourism is another huge and growing area and is the 4th most important economic sector after oil, petroleum and cereals. The exchange rate has become extremely attractive to foreigners who have started to choose Argentina as their tourist destination and full occupancy is often seen in tourist areas. In the first 4 months of this year 19 million people visited Argentina, which equates to a 5% growth on the same period last year

The general recovery is also reflected in fiscal behaviour. Recovery of taxes continues to break records because of the high levels of exports, the majority being agricultural (11% of the revenue the state receives). The growth in different sectors of production has generated a high level of economic trust which has passed on increased confidence in the banking system following the financial crash of 2001-2002. Figures confirm this with an increase in bank deposits (despite low interest rates) of 60% in the last 2 years. Borrowing levels doubled in the same period. The general recovery is also reflected in greater consumer spending.

What's Next?

The majority of businessmen and economic analysts agree that the prospects next year are very good for all sectors of production providing economic conditions remain the same with a stable exchange rate and controlled inflation. Levels of growth and employment have reached pre crisis levels and the majority of economists agree that to maintain the positive economic cycle and level of growth Argentina now depends on further inward investment. With this in mind the Economic Ministry announced its intention on September 3rd to provide tax breaks to companies re-investing capital for further growth.

At the moment the economy continues to produce strong signs of growth. In the first half of 2005 economic activity showed an increase of 9% with respect to the same period in 2004. Unemployment is level at 12% which means that since 2002 more than 2,000,000 people have found work.

In light of the fact that Argentina was predicted to disappear from the map, the general viewpoint now is very positive.

Well I don`t know about you lot but I`d buy into it…hang on…I already did. Have fun, I`m off for an Asado and some fantastic wine!

Neil Rushen works at Mendoza Property

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