As the third largest economy in Latin America, Argentina boasts a gross domestic product (GDP) of over $540 billion according to the World Bank. Between 2003 and 2009, Argentina’s middle class doubled from 9.3 million to 18.6 million, now making up 45 percent of the population. And after years of economic decline, changes are being made that are intended to revitalize and stimulate the economy.

Argentina presents itself as a market with great potential. What do businesses looking to expand into the country need to know?

Economic Outlook

The current economic forecasts are positive. Argentina is the second largest eCommerce market in Latin America and will lead the region in terms of overall growth, with sales expected to grow from $3.4 billion in 2014 to $8.3 billion in 2019. The number of online consumers will also grow from 7.8 million in 2014 to 12.6 million in 2019. Unemployment should see a modest decline by 2020, from 5.9 percent to 5.2 percent. Most importantly, inflation is predicted to improve by the greatest margin, falling from 23.9 percent to 9.5 percent by 2020.

Despite a sluggish economy in 2015, the Organization for Economic Co-operation and Development (OECD) predicts increased growth in foreign demand for Argentina’s products and greater business confidence will lead to more investment in the country.

Regulatory Compliance Landscape

In Argentina, the body that enforces anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations is the Unidad de Información Financiera (UIF). As the country’s financial intelligence unit, the UIF carries out its tasks in three stages: prevention and/or detection of suspicious transactions, risk analysis and performance management, and criminal prosecution.

Although the UIF was first created in 2000, it did not gain its present authority and power to pursue prosecution until much later. After a mutual evaluation report released in October 2010 by the Financial Action Task Force (FATF) found insufficient compliance by Argentina with the FATF’s Core and Key Recommendations, the country was consequently identified as a country with strategic AML/CFT deficiencies. This resulted in Argentina being placed under scrutiny by the FATF with the expectation that the government and regulators would take decisive action to establish proper compliance. In 2011, the Argentine Congress of the Nation passed new laws to restructure the regulatory system and how AML and CFT violations are dealt with, including bestowing the UIF with its present regulatory clout. In 2014, the FATF determined that Argentina had sufficiently met the requirements to achieve adequate compliance and removed the country from the follow-up process.

Commerce Challenges and Opportunities

A major challenge hurting economic growth in Argentina has been its restrictions on currency. The previous president, Cristina Fernandez de Kirchner, introduced these controls in 2011 and created an artificially strong Argentinian peso. The result of this decision has been to make exports from Argentina uncompetitive and the emergence of a flourishing black market.

The previous Argentine government placed tight restrictions on access to foreign currency and sending money overseas from the country. These policies have discouraged new investment in Argentina, as it became much harder to do business with the country. In November 2015, American Airlines announced that it would no longer accept the Argentinian peso for payments, citing “repatriation issues.”

However, the tides started to turn in the weeks leading up to the presidential election that took place not long before American Airlines’ announcement. In anticipation of promises for change made by both presidential candidates, interest and investment by foreign businesses reached a fevered pitch. Companies from Brazil, Germany, and the U.S. are among the leaders in the new initiative to build a stronger presence in Argentina. And in what could be perceived as a strong vote of confidence in the future direction of the country, the U.S. Chamber of Commerce has begun to bring business leaders to Argentina for the first time in two decades.

Following the election, further decisive measures were taken to make Argentina more open for business. The newly-elected president, Mauricio Macri, lifted capital controls and re-established a market-valued peso as one of his first acts in office. Even though there may be a risk of higher inflation because of a drop in value, a key benefit will be that the price of goods from Argentina will be more attractive on the global market.

Another currency option for foreign businesses and Argentinian consumers is Bitcoin. The New York Times Magazine published an article in April 2015 that highlighted the rising popularity of Bitcoin in Argentina due to the country’s harsh policies on foreign currency. In spite of having relatively few Bitcoin users, Argentina has earned a reputation as a place where bitcoins are being regularly used for everyday commercial transactions.

The future now looks much more promising for Argentina. President Macri, who has a strong business background, has been actively courting foreign investment that could be worth up to $20 billion. These investments are coming from a range of industry sectors and will certainly help Argentina rebuild its economy and reestablish itself as an attractive and viable place for overseas companies to do business in.

What opportunities do you see for your business in Argentina?