The Argentine economic crisis (1999â€“2002) was a major downturn in Argentina's economy. It began in 1999 with a decrease of real Gross Domestic Product (GDP). The crisis caused the fall of the government, default on the country's foreign debt, widespread unemployment, riots, the rise of alternative currencies and the end of the peso's fixed exchange rate to the US dollar.
By 2002 GDP growth had returned, surprising economists and the business media. As of 2012, the default had not been completely resolved, although the government had repaid its IMF loans in full.
Argentina's many years of military dictatorship (alternating with weak, short-lived democratic governments) caused significant economic problems. During the so-called National Reorganization Process (1976â€“1983), the country went into debt for never-finished projects, the Falklands War, and state takeover of private debts. The Neoliberal economic platform was introduced during this period. By the end of the military government the country's industries were severely affectedâ€”unemployment, calculated at 18% (though official figures claimed 5%), was at its highest point since the Great Depression.
In 1983, democracy was restored with the election of president RaÃºl AlfonsÃn. The new government intended to stabilize the economy and create a new currency (the austral, the first of its kind without peso in its name), for which new loans were required. The state eventually became unable to service this debt and confidence collapsed.
Inflation, which had stayed between 10 and 20% per month, spiraled out of control. In July 1989, Argentina saw 200% inflation for the month, peaking at 5,000% for the year. During the Alfonsin administration, unemployment did not substantially increase, but real wages fell by almost half (to the lowest level in fifty years). Prices for state-run utilities, telephone service, and gas increased substantially. Amid riots, President AlfonsÃn resigned five months before the end of his term and President-elect Carlos Menem took office early.