Argentina has abundant natural resources, a well-educated population, an export-oriented agricultural sector and a relatively diversified industrial base. Domestic instability and global trends, however, contributed to Argentina's decline from its noteworthy position as the world's 10th wealthiest nation per capita in 1913 to the world's 36th wealthiest in 1998. Though no consensus exists explaining this, systemic problems have included increasingly burdensome debt, uncertainty over the monetary system, excessive regulation, barriers to free trade, and a weak rule of law coupled with corruption and a bloated bureaucracy. Even during its era of decline between 1930 and 1980, however, the Argentine economy created Latin America's largest proportional middle class; but this segment of the population has suffered from a series of economic crises between 1981 and 2002, when the relative decline became absolute.

Argentina's economy started to slowly lose ground after 1930 when it entered the Great Depression and recovered slowly, afterwards. Erratic policies helped lead to serious bouts of stagflation in the 1949-52 and 1959-63 cycles and the country lost its place among the world's prosperous nations, even as it continued to industrialize. Following a promising decade, the economy further declined during the military dictatorship that lasted from 1976 to 1983 and for some time afterwards. The regime engaged in a disorganized and corrupt financial liberalization that increased the debt burden and interrupted industrial development and upward social mobility; over 400,000 companies of all sizes went bankrupt by 1982 and economic decisions made from 1983 through 2001 failed to revert the situation.

Record foreign debt interest payments, tax evasion and capital flight resulted in a balance of payments crisis that plagued Argentina with serious stagflation from 1975 to 1990. Attempting to remedy this, economist Domingo Cavallo pegged the peso to the U.S. dollar in 1991 and limited the growth in the money supply. His team then embarked on a path of trade liberalization, deregulation and privatization. Inflation dropped and GDP grew by one third in four years; but external economic shocks and failures of the system diluted benefits, causing the economy to crumble slowly from 1995 until the collapse in 2001. That year and the next, the economy suffered its sharpest decline since 1930.

By 2002, Argentina had defaulted on its debt, its GDP had shrunk, unemployment reached 25% and the peso had depreciated 70% after being devalued and floated.

In 2003 expansionary policies and commodity exports triggered a rebound in GDP. This trend has been largely maintained, creating millions of jobs and encouraging internal consumption. The socio-economic situation has been steadily improving and the economy grew around 9% annually for five consecutive years between 2003 and 2007 and 7% in 2008. Inflation, however, though officially hovering around 9% since 2006, was privately estimated at 12-15% that year and over 15% in 2008, becoming a contentious issue again. The urban income poverty rate has dropped to 18% as of mid-2008, a third of the peak level observed in 2002, though still above the level prior to 1976. Income distribution, having improved since 2002, is still considerably unequal.

Argentina faces slowing economic growth in light of an international financial crisis. The Kirchner administration responded at the end of 2008 with a record US$32 billion public-works program for 2009-10 and a further US$4 billion in new tax cuts and subsidies. Kirchner has also nationalized private pensions, which required growing subsidies to cover, in a move designed to shed a budgetary drain as well as to finance high government spending and debt obligations.