In the last decade, Argentina has undergone a rapid ascension from widespread poverty and a huge budget deficit towards economic prosperity and stability. The government of Argentina, only ten years ago, defaulted on a $100 billion budget, sending over half its population into poverty. Following this economic catastrophe was a period of contraction. This, however, would last only three months and would then give way to economic growth.
Economic growth was made possible by the authorities’ ability to keep the Argentine currency in balance and not let it rise too high and become overvalued. This growth is visible through Argentina’s current unemployment rate, economic growth rate, and number of consumer goods being purchased in contrast to a decade ago. The unemployment rate in 2002 was over 21.5% and today it is under 9%. Also, Argentina's economy has grown at a rate over 6% in seven of the last eight years, and there has been a significant increase in the purchase of consumer goods. For example, about 800,000 new vehicles are predicted to be bought in Argentina this year, and hi-tech products such as plasma TVs and BlackBerrys have become commonplace in the homes of the middle class.
In recent years, Argentina has received little foreign investment and has been unable to borrow directly from international bond markets. This in many situations would spell disaster for a nation’s economy. For Argentina though, this has not been the case. Argentina’s economic turnaround and recent success is due largely in part to its ability to enact macroeconomic policies that are appropriate for its own economy. The leaders of Argentina have focused on mending domestic economic problems and this has proved to be a huge success.
Although Argentina is far from perfect and still faces problems, namely corruption and inflation, a valuable lesson can be learned from the economic progress that was made. Argentina’s ability to repair its own economic problems and to keep its currency in check allowed it to bounce back from an economic disaster. Ironically, Argentina’s economic turnaround started by defaulting on its debt and although this is unlikely the right recipe for economic success, it proves that economic recovery is never out of reach.