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23 February 2023

Can Argentina's Oil Industry Help Stave Off An Economic Crisis?

Argentina is once again in the grips of an economic crisis, with its economy expected to see meager growth in 2023 or even a contraction.

Despite the economic gloom and doom, Argentina's oil and gas sector is providing some positivity as production continues to grow.

The Vaca Muerta shale formation has long been seen as a silver bullet for Argentina's economic woes, but it is far from the only bright spot in the country's oil industry.

Argentina, which with a 2022 gross domestic product of $632 million is Latin America's third-largest economy, is once again in the midst of a deep economic crisis that emerged during the 2020 COVID-19 pandemic. The severity of the crisis is illustrated by the country defaulting on its sovereign debt in May 2020 for the ninth time in its history. Despite GDP growing by a notable 10% during 2021 and then 5% in 2022, rampant inflation, which recently topped 104%, weak government finances, and a soaring current account deficit are all weighing on the economy. As a result, the economy will expand by a meager 0.2% during 2023 and could even contract. For these reasons, Buenos Aires views the growing hydrocarbon sector as a solution with the vast Vaca Muerta shale formation seen as a silver bullet for Argentina's considerable economic woes.

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