Argentina

Official designation: República da Argentina

Capital and seat of government: Buenos Aires (Federal District and province - 18.5 million

inhabitants, 2010)

Argentina is located in the extreme south of the American continent with an area of 3,761,274

km², the Argentine territory has a varied landscape, in which coexist fields of ice and arid areas,

alternating mountainous reliefs with plateaus or plains, communicating fluvial courses or

lacustrine areas with the oceanic amplitude, and the steppe vegetation does not opaque the

scenery of forests and jungles. In the country we find four types of climate (hot, temperate, arid

and cold) whose variations are determined by the extension of the territory and the accidents of

the relief.

Population Argentina

With a population of 40,117,096 inhabitants, the Argentine Republic is characterized by being a

"melting pot of races" that defines the essence of Argentina. The first settlers of the current

Argentine territory were natives who, gathered in diverse tribes, developed their respective

cultures in diverse degree. With the arrival of the conquistadors, in the 16th century, the customs

and values of the Spaniards generated an enduring cultural encounter and the beginning of the

mestizaje of whites and Indians. To these they were added the mulatos and zambos to affirm this

way the conformation of the Creole population.

The last important migratory flow took place in the second half of the XIX century and the first

half of the XX century. Of predominantly European origin, they constitute another fundamental

pillar of this true "crucible of races".

Religion

In Argentina there is total freedom of worship. The Catholic religion is mostly professed but

other cults are also practiced such as Protestantism, Judaism, Islam, Greek Orthodox religion,

Russian Orthodox and others.

Currency

The official currency is the peso, divided into 100 cents.

Language

The official language is Spanish. Brought by the conquistadors it suffered changes along the

time, product of the coexistence with the native indigenous towns that enriched it and the

successive immigrations that made their contribution to the language of the Argentines.

However, other Amerindian languages such as Mapuche, Guaraní and Quechua, among others,

still persist.

Climate:

Argentina has a great variety of climates: temperate and humid in the Pampean plain, cold and

humid in the extreme west of Patagonia, subtropical in the northern part of Mesopotamia and

warm in the Northwest. From November to March, the average temperature is 23° C and, from

June to September, 12° C.

Economy

With a Gross Domestic Product (GDP) of more than US$500 billion, Argentina is one of the

largest economies in Latin America. Argentina has abundant natural resources in energy and

agriculture. In its territory of 2.8 million square kilometers, the country has extraordinarily fertile

agricultural lands and an enormous potential in renewable energies. It is a leader in food

production, with large-scale industries in the agriculture and livestock sectors. Argentina also has

great opportunities in some manufacturing sub-sectors and in the high-tech innovative services

sector.

However, the historical volatility of economic growth and the accumulation of institutional

obstacles have impeded the country's development. Urban poverty in Argentina remains high,

about 50 per cent higher than in new high-income countries and almost double that of OECD

countries. The incidence of poverty is 41 per cent among children aged 0-14. To address this

situation, priority has been given to social spending through various programmes, including the

creation of the Universal Allowance per Child, which reaches approximately 4 million children

and adolescents up to 18 years of age, 9.3 per cent of the country's population.

In recent years, Argentina has been working on an ambitious programme of structural reforms

and, at the same time, has begun to correct some of the macroeconomic imbalances. The new

administration has moved quickly to implement key reforms such as the unification of the

exchange rate, the agreement with international creditors, the modernization of the import

regime, and the reform of the national statistical system.

In addition, Argentina has taken up a very active agenda in international politics and was at the

forefront of the presidency of the G-20 during 2018, at the same time as it expressed its intention

to join the OECD and inaugurated its observer role in the Pacific Alliance.

The financial turbulence of 2018, which impacted a 50.6% depreciation of the Argentine peso,

implied the revision of the economic plan and an agreement with the International Monetary

Fund (IMF) for some US$57 billion until 2021, which includes a strong reduction in spending. In

2018, the government met its fiscal targets, and aims to achieve primary fiscal balance in 2019

and a primary fiscal surplus of 1% in 2020.

The economic context remains volatile. After a fall of 2.5% of GDP in 2018, a contraction of

1.3% is expected by 2019. In a context of annual inflation above 50% (the highest level since

1991), the Argentine peso regained volatility and depreciated more than 13% during 2019.

Prices in Argentina continue to rise and inflation last April was 55.8% year-on-year, driven

mainly by the sharp devaluation of the peso last year, although it slowed if you take into account

the data month by month.

Only in the first quarter, as revealed on Wednesday in its monthly report by the National Institute

of Statistics and Censuses, prices accumulated an increase of 15.6%. Last month it rose by 3.4%

compared to March, slightly less than the 4.7% increase recorded in February.

"Inflation resumed a downward trend in April but is still very high. It is clear to me that these

levels of inflation cause a great deal of damage, especially to the most humble. That is why we

will stand firm with our monetary policy to defeat inflation," Central Bank President Guido

Sandleris said at a press conference.

Argentina's high inflation - in 2018 it was 47.6% accumulated, the highest figure since 1991, and

in 2017 24.8% - occurs in the context of an economic recession that began in the second quarter

of 2018.

The problems originated when, at the end of April of that year, the national currency began to fall

against the dollar, mainly due to capital flight from emerging markets to the United States, in a

context of rising interest rates in that country.

Argentina, which is heavily dependent on foreign capital, suffered a great deal from this outflow

of investors, which was coupled with a severe drought that seriously damaged agricultural

production, on which the national economy depends.

In one year, the peso has devalued more than 50%, and each time there are cycles of abrupt falls

impacts in the short term on common prices.

Sandleris valued that with today's data "the economic forces that reduce inflation are already

underway".

"We have a strict monetary policy and we are recovering basic macroeconomic balances. Fiscal

equilibrium, a competitive exchange rate and undistorted relative prices," he added.

Despite the fact that in the last quarter of last year a relatively calm exchange rate and smaller

increases in the prices regulated by the government - electricity, water and gas - were reflected in

a slight inflationary slowdown - after the September peak of 6.5% per month -, the concentration

of new tariff increases in the first quarter of 2019 had raised the index again.
"The zero-growth monetary base scheme has been in place for almost eight months. The Central

Bank over met its target monetary base in all months of this scheme. However, inflation behavior

was not linear," Sandleris acknowledged.

Transport, with a 68% increase, and food and non-alcoholic beverages, with a 66.2% increase,

are the two sectors with the highest increases in a year, although in the cumulative four-month

period education is the most affected, with an increase of 22.4%.

As for the supermarket basket, in March the prices of dairy products rose by 7%, while

vegetables, tubers and legumes fell by only 8.4% and fruits by 1.1%.

The Government of Mauricio Macri reiterates that inflation is a big problem, but insists that the

only way out of the crisis are the measures it is taking, influenced by the financial assistance

program signed in 2018 with the International Monetary Fund, which includes a loan of 56,000

million dollars.

To calm the dollar, the Central Bank maintains a policy of high interest rates that in turn resent

economic activity, and at the end of last April, the monetary authority announced intervention

measures in the exchange market, including the sale of dollars even when the exchange rate is

within the so-called non-intervention zone.

Accumulated inflation in Argentina in the first half of the year was 22.4%, close to the 23% that

the Government of Mauricio Macri had estimated for 2019 in the National Budget Law, in a

context of economic recession and with the October presidential elections on the horizon.

In June, as reported Tuesday by the National Statistics Institute, consumer prices rose by 2.7%

over the previous month and by 55.8% year-on-year, high but slightly lower than in May, when

progress was 3.1% and 57.3%, respectively.

It should be noted that the exchange rate of the peso to the dollar, one of the factors that have

most influenced the increase in inflation since April 2018 - when the abrupt fall of the national

currency triggered a strong recession - was not felt in June, as the Argentine currency came to

appreciate prominently.

"Inflation is still too high, but it is falling," Central Bank President Guido Sandleris said at a press

conference after the data were released.

The head of the monetary authority stated that there are now three consecutive months in which

monthly inflation "is falling" (in March it was 4.7%, in April 3.4% and in May 3.1%) and that

this will be the trend for the coming periods.

"This process is not linear, it is not that every month we should expect lower inflation than the

previous month, but we see a clear trend," he said, and clarified that the conditions for prices to

fall are to achieve fiscal balance, a competitive exchange rate and the correction of regulated

tariffs for public services, which strongly influenced the indicator and whose increases the

government already announced that it froze for the remainder of the year.

This deceleration of the consumer price index (CPI) - which in 2018 accumulated 47.6%, the

highest level since 1991 - comes one day after the International Monetary Fund (IMF), with

which last year the government of Mauricio Macri signed a loan of 56,300 million dollars to face

the crisis, worsened its forecasts for Argentina.

The organization predicted an economic contraction of 1.3% this year and a growth of 1.1% in

2020, while it foresaw that inflation will close 2019 at 40%, above the 30.5% that the IMF itself

calculated three months ago.

Although the National Executive foresaw in the Budget Law for 2019 -approved last November-

an annual inflation of 23 %, a figure that has almost reached only in the first semester, on July 2

the analysts consulted by the Central Bank placed at 40 % its forecast for the whole year and 27

% in 2020.

Unemployment:

In twelve months, the unemployment rate rose from 9.1 to 10.1% according to INDEC data for

the first quarter of this year. This means projecting to the total urban population there are

1,920,000 urban unemployed, 220,000 more than a year ago. If the rural population is included,

unemployment hits more than 2 million people.

Underemployment also increased from 9.8% to 11.8%. This brings to 2,250,000 people who

work less than 35 hours a week, although they are willing to work more. That's 420,000 more

than a year ago.

From these numbers it can be inferred that almost 4,200,000 people have employment problems

because they can't find work or do short-time jobs, especially in the informal sector. There are

640,000 more in just one year.

Culture

The characteristics of the Argentine culture are centered in the diversity of mixtures between

races that took place during the years of the immigration of the Europeans to this country, they

have ideologies where the most prominent is the thought and social-democratic language, the

conviction in the freedom, the democracy and the respect for the human rights. Within Argentina

there are different activities related to culture and art, particularly within the theater, painting,
sculpture, music and literature specifically and with more proportion in its capital Buenos Aires,

daily activities are offered as concerts, exhibitions, theater performances and ballet. The music

that identifies them is the tango, in this type of dance they are known at international level, on the

other hand the Argentine national rock or progressive music is interpreted and danced in diverse

public places with a massive attendance of people.

The current population of Argentina is currently the result of a large mass of immigrants in the

country since various workers entered the country between 1850 and 1950 mostly Italians,

followed by Spaniards, with the population that inhabited the country indigenous or Afro-

Argentines and gauchos who descend from the colonial period, it is estimated that about 80% of

the population is descended from Europeans, mostly Italians and Spaniards, it is indicated that

about 90% of the inhabitants have some European ancestors, mainly Italians and 56% some

indigenous ancestors and finally 3% some African ancestors, the mestizaje was reinforced due to

the War of Independence, civil wars and war of Paraguay since the great majority of the soldiers

were mestizos and in the middle of XIX century the European immigration reinforced the

diversity of races.

The customs of the culture of Argentina, represent the use of behaviors that have adapted, mostly

come from rural origin, from the countryside came the large number of traditions due to the large

amount of immigration that was presented in this country, however always preserved a certain

identity, in Argentina there is a day where they celebrate their traditions, which is the November

10 of each year, on this date commemorates the birth of the poet Jose Hernandez, writer Martin

Fierro, this celebration has dyes gaucho which pays tribute to each of its forms. There are many

typical customs of the Argentine culture, which differ according to the region but most share

peasant traits.
Business Culture

The main cities where most of the business, commercial and tourism are developed are: Buenos

Aires, which is the capital, Cordoba, La Plata, Mar del Plata, Mendoza, Rosario and San Carlos

de Bariloche.

The hard economic cycles that Argentina has suffered over time have caused its inhabitants to

have a much more serious and immediate business culture, so that the business vision is always

going to be short or medium term.

In general, local entrepreneurs prefer to invest their own funds as credit lines are very limited or

with too high an interest margin. On the other hand, their outlook for finding new and better

investment and business opportunities keeps the willingness to receive proposals from foreign

countries open.

Personal relationships are of great value to Argentines, so it is common that they are interested in

knowing a little more about you, for them knowing more about the person gives them an idea of

how you can behave on the business and professional level. That said, you may need more than

one meeting before successfully closing a business.

Keep in mind that courtesy and kindness take on great importance in business relationships, try to

raise another topic of conversation other than business to start the meetings.