2023 US Investment Climate Statements (Part I): Argentina presents opportunities in agriculture, energy, and health, despite uncertainty and chronic inflation

This is the first in a series of five articles examining the US Department of State’s latest report on investment prospects for Argentina, Mexico, Colombia, Spain, and Brazil

In an electoral year marked by rising prices and economic instability, Argentina still offers attractive opportunities for investors, says the latest 2023 Investment Climate Statements report from the US Bureau of Economic and Business Affairs.

According to their analysis, agriculture, energy, health, infrastructure, information technology, and mining are the areas with the greatest promise. "However, economic uncertainty, interventionist policies, high inflation, and persistent economic stagnation have prevented the country from maximizing its potential", the report adds.

While the US Department of State applauds Argentina’s compliance and commitment to the IMF debt renegotiation program, "meeting the targets has not helped to rebalance the economy or set it on a sustainable path. Macroeconomic imbalances persist, fueled by weak confidence, low policy credibility, high inflation, and uncertainty ahead of national elections in 2023".

The report also highlights some measures from Alberto Fernández’s administration: "The Argentine government offered preferential exchange rates to promote soy exports and eliminated export taxes for specific businesses and industries, including small and medium-sized enterprises; auto and automotive parts exports over 2021 volumes; and information technology service exports from companies enrolled in the knowledge-based economy promotion regime. There were also investment promotion incentives in key export sectors such as agriculture, forestry, hydrocarbons, manufacturing, and mining".

Nevertheless, the high cost of capital in the country "affected the level of investments in developing renewable energy projects, despite the potential for both wind and solar power". Other difficulties include "a high and unpredictable tax burden and rigid labor laws", as pointed out by foreign and domestic companies.

In this scenario, "the United States continues to be the top investor in Argentina with more than USD 12.5 billion (stock) of foreign direct investment as of 2021".