Argentina has a long history of economic problems since they gained independence from Spain.And recently it has improved gradually, but it seems like a recession hits the country and their economy drastically drops.
When President Carlos Menem took office in 1989, Argentina possessed huge external debts as inflation had grown to 200% per month and the economic output was plummeting fast.To try and end this economic crisis, the government headed on a path of trade liberalization, deregulation, and privatization.It began working by 1991 after the government decided to privatize most of the state controlled companies, opened up to foreign trade and investment, created private pension and workers compensation systems.
The economy was doing great until the peso crisis in 1995, which caused a loss of banking system deposits and a severe recession, but ended quickly as it was followed by reforms to give a boost to the domestic banking system.This helped the real GDP of Argentina reach 8% by 1997.This, though, was followed by international financial problems caused by Russia’s investor anxiety in Brazil, one of Argentina’s neighbors.It created the highest domestic interest rate in Argentina in more than three years which halved the economic rate.Newly elected president, Fernando de la Rua sponsored tax increases and spending cuts to reduce the deficit, which had fell to 2.5 % of GDP (Kurian 76).
One of Argentina’s challenges to produce consistent economic growth is the high unemployment rate and the lack of equitable distributing of income.Since the mid-1990s, Argentina has seen double-digit unemployment which rose to as much as 18.4% in 1995, but was lowered in five years as in fell to15.4% in May of 2000 because of major private investments were implemented as labor productivity rose and the economic was the strongest in the capital-intensive sectors.
There are important structural forms that are still needed in A…