The crisis had numerous consequences which affected virtually every segment of the society. During the economic collapse as a result of massive fund withdrawals, many small and medium enterprises closed because of the lack of capital. Workers at these enterprises were faced with a loss of employment which meant no source of income, so many decided to reopen businesses on their own without the presence of the owners and their capital.
Agriculture, the foundation of the national economy was also affected by the crisis. Fear that the products might arrive damaged from the poor conditions, caused a number of rejected orders in some international markets. Even the United States Department of Agriculture put restrictions on Argentine food and drugs arriving at the United States.
The immediate macroeconomic consequences of the crisis were severe. Real GDP fell around 11% in 2002, bringing the cumulative decline since 1998 to almost 20%. The unemployment rate rose above 20 percent and inflation peaked at a monthly rate of about 10 percent in April. President Eduardo Duhalde finally managed to stabilize the situation to a certain extent, confirming the debt moratorium and announcing the end of the convertibility regime.
The convertibility was replaced with a dual exchange rate system based on an official exchange rate of Arg$1.4 per United States dollar for public sector and most trade related transactions. All other transactions took place at prevailing market rates. At the same time, the monthly deposit withdrawal limit was raised to 1,500 pesos, but long-term dollar deposits remained frozen. Another problem followed with loans taken in dollars, since people were suddenly faced with repayments that nearly doubled.
President Kirchner and economic recovery
In 2003, President Néstor Kirchner was elected to the office and still had a crisis struck country to deal with. Nevertheless, the economic outlook was now completely different since the devalued peso made Argentine exports cheap and competitive abroad. Exchange rate discouraged imports stimulating national economy. Also, the high price of soy in the international market produced an inflow of massive quantities of foreign currency since Argentina's soy products were exported to China. The government encouraged accessible credit for businesses, combined with an aggressive plan to improve tax collection.
The plan also included directing large amounts of money for social welfare and tight expenditure control in other fields. The peso slowly revalued, while agricultural exports grew and tourism slowly returned. The new trade surplus ultimately caused the government to begin intervening to keep the peso from revaluing further in order to stay competitive. National GDP had grown consistently since 2003, reaching the levels of 1998 in late 2004.
Other macroeconomic indicators have followed suit. In 2005, Argentina gained financial independence from International Monetary Fund. On December 15, President Kirchner announced that Argentina would pay the whole debt totaling 9.810 billion USD to the International Monetary Fund. The presidential election in 2007 delivered a clear victory for Cristina Fernández de Kirchner, who formally succeeded her husband Néstor Kirchner.
Holding on to interventionist policy and increased state control the country still has many structural economic reforms to achieve. After years of decline, public sector debt stabilized at 51 % of GDP in 2010. Presidential elections are due in 2011 and results of the new policies remain to be seen.