Despite its natural resource abundance and a well-educated workforce, Argentina’s economic performance has lagged that of comparable economies. A volatile macroeconomic environment, characterised by a series of boom-and-bust cycles, has undermined confidence, resulting in one of the lowest investment rates in Latin America. Informal employment remains high in international comparison, hindering the optimal allocation of resources across the economy. Labour productivity has been falling over the last decade, leaving Argentina even further away from the OECD average.
Against this difficult background, Argentina has recently embarked on an ambitious reform process, which has started to pay off. Continuous efforts will be necessary to phase out distortionary taxes that hinder investment and to improve the efficiency of public works. Enhancing the flexibility of labour market regulations and lowering non-wage labour costs would help tackle labour market informality. Continuing to reduce barriers to domestic and international competition would foster productivity growth.
