Do you have an appetite for risk? Consider investing in Argentina.
Are you interested in investing in Argentina? Large tracts of fertile and arable land, prolific industrial areas, important reserves of natural resources. Also a vast network of educational resources (63 private and 66 public universities). Qualified human resources (five Nobel laureates), good health system, railways, seaports, a great coastline, navigable rivers, a vast and broad middle class (eager to consume). On the other hand, a growing tourism industry and one of the highest levels of human development in Latin America.
Argentina has all this and much more, however, the country struggles to achieve and maintain a sustainable economic growth and development rate over the years. It has urban poverty of 42%, according to a world bank report.
In the following lines, I will briefly explain why investing in Argentina should be considered, even though a risk-seeking attitude is required for this.
Consider investing in Argentina. Adversities to consider.
- Economic indicators
The general picture for Argentina is that it is a strong economy in Latin America. GDP in 2020 had a strong impact from COVID-19. Market prices fell to € 336,023 million compared to 2019, which registered € 402,273 million.
The current federal government is heavily geared towards market-friendly reforms. This is leading to a better business environment as the country has returned to international financial markets. Despite the above, Argentina still has a weak and shallow financial sector (poorly capitalized). Also insufficient investments in electricity supply, vulnerability to the prices of raw materials (in particular, soybeans and wheat) and leading the way, as well as high inflation and a vulnerable institutional framework.
- Business climate
The country still suffers from the image left by the economic crisis of the late 1990s and early 2000s. According to the World Bank’s 2020 Doing Business report, Argentina’s business climate ranks it 126th out of 190 countries. However, recent fiscal policy adjustments and negotiations with international financial institutions such as the IMF show signs of long-term support and development from Argentina.
Understanding the local culture and the way business is conducted will not be a challenge. Regardless, if you are seriously considering investing in Argentina, getting local advisers or partners, is sure to increase your returns and speed up any business process. Especially when dealing with local authorities and suppliers.
- Most attractive sectors
Today, national authorities seek to attract significant investment in key areas such as:
Infrastructure and transportation
Energy and renewable energies
Agriculture and livestock
Oil and gas
In April 2021, the 2021 Export Plan was presented with the Secretary of International Economic Relations Jorge Neme. Also with Juan Usandivaras, Executive President of the Argentine Investment and International Trade Agency. And Pablo Sívori, Undersecretary of Trade and Investment Promotion of the Argentine Foreign Ministry.
“We want to build an export culture and our objective as an Agency is to be the bridge between the country’s export strategy and the daily life of companies”. And “Incorporate a thousand more SMEs to the Exporter Challenge program,” said Juan Usandivaras. Thus, promoting opportunities for multiple sectors, both at the national and provincial level, with opportunities in the financing, engineering, development, and operation of these projects.
The main opportunities are in the energy sectors where investment tickets total more than USD 240 billion. And include the development of the vast hydrocarbon reserves of the Vaca Muerta field. The resources are located in the Neuquina Basin, the most prolific oil and gas field in the country. There are rich unexplored mining areas, as well as tenders for thermal, hydraulic, and renewable energy projects.
After energy comes to an ambitious infrastructure plan, which offers more than USD 50 billion in investment projects in roads, highways, railways, water, sanitation, irrigation, sea and river ports, airports, urban mobility, telecommunications, and public housing.
Finally, the country offers broad potential for other areas ranging from agribusiness to real estate and tourism.
Some additional tips for you to consider investing in Argentina: low-risk aversion and experience in emerging markets are required. It is recommended to have a local partner. Profits are not assured, but the potential for long-term return is great and the country is ready to prosper and develop. Argentina is a country that is mostly open, welcoming, and wants direct foreign investment.
For other issues related to international trade we leave you our blog #beinternational https://madiuc3m.com/be-international/.
Post written by Facundo Francisconi