Argentina is by its very nature a complex place in which to do business. It's a vast country – the second largest in Latin America – with production concentrated in a single area and a jaw-dropping number of regulations and administrative barriers.
It's complicated...
There are a host of reasons Argentina is where it is today – historical and otherwise. Uncontrolled government spending and heavy taxes on exports coupled with strict controls on imports are just some of the contributing factors.
The economy is on rocky ground with the depreciation of the Argentine peso in February and rocketing inflation. Limited economic growth and the lack of legal certainty and external financing means Argentina does not attract long-term investments.
Potential for greatness
Despite its problems, there's reason to hope for Latin America's third largest economy. The government has announced corrective measures to deal with the recent currency devaluation, which is a start at least. The United Nations Economic Commission for Latin America has also predicted that although difficulties will remain, the country will not slip into recession and GDP will grow by 3.2% this year.
Argentina's recent settlement with oil company Repsol after the government nationalised its stake in the country's biggest oil firm in 2012 is positive news indeed. The agreement dispels any legal uncertainty and is expected to help Argentina attract FDI in its impressive shale oil and gas reserves – the Vaca Muerta shale-oil and gasfield is thought to be the world's third largest.
The 2015 presidential elections are perhaps garnering the most hope and they are seen as a real opportunity for change. As Mexico's young and enthusiastic government has shown, new blood can inject life into failing systems and economies.
The twists and turns of Argentina's convoluted system can't be ignored but neither should they put you off. Its standing in Latin America and its substantial oil and gas reserves highlight the potential of this emerging economy. But don't go it alone, a partner like us can help you navigate the compliance quagmire and take the worry out of doing business in Argentina.
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