Buenos Aires - Economy

Economy

Buenos Aires is the political, financial, industrial, commercial, and cultural hub of Argentina. Its port is one of the busiest in South America; navigable rivers by way of the Rio de la Plata connect the port to north-east Argentina, Brazil, Uruguay and Paraguay. As a result it serves as the distribution hub for a vast area of the south-eastern region of the continent. Tax collection related to the port has caused many political problems in the past.

The economy in the city proper alone, measured by Gross Geographic Product (adjusted for purchasing power), totalled US$ 84.7 billion (US$ 34,200 per capita) in 2011 and amounts to nearly a quarter of Argentina's as a whole. Metro Buenos Aires, according to one well-quoted study, constitutes the 13th largest economy among the world's cities. The Buenos Aires Human Development Index (0.923 in 1998) is likewise high by international standards.

The city's services sector is diversified and well-developed by international standards, and accounts for 76% of its economy (compared to 59% for all of Argentina's). Advertising, in particular, plays a prominent role in the export of services at home and abroad. The financial and real-estate services sector is the largest, however, and contributes to 31% of the city's economy. Finance (about a third of this) in Buenos Aires is especially important to Argentina's banking system, accounting for nearly half the nation's bank deposits and lending. Nearly 300 hotels and another 300 hostels and bed & breakfasts are licensed for Tourism in Buenos Aires, and nearly half the rooms available were in four-star establishments or higher.

Manufacturing is, nevertheless, still prominent in the city's economy (16%) and, concentrated mainly in the southside, it benefits as much from high local purchasing power and a large local supply of skilled labor as it does from its relationship to massive agriculture and industry just outside the city limits themselves. Construction activity in Buenos Aires has historically been among the most dramatic indicators of national economic fortunes (see table at right), and since 2006 around 3 million m² (32 million ft²) of construction has been authorized annually. The Port of Buenos Aires handles over 11 million revenue tons annually, and Dock Sud, just south of the city proper, handles another 17 million metric tons.

To the west of Buenos Aires is the Pampa Húmeda, the most productive agricultural region of Argentina produces wheat, soybeans and corn (as opposed to the dry southern Pampa, mostly used for cattle farming and more recently production of premium Buenos Aires wines). Meat, dairy, grain, tobacco, wool and leather products are processed or manufactured in the Buenos Aires metro area. Other leading industries are automobile manufacturing, oil refining, metalworking, machine building and the production of textiles, chemicals, clothing and beverages.

The city's budget, per Mayor Macri's 2011 proposal, will include US$5.9 billion in revenues and US$6.3 billion in expenditures. The city relies on local income and capital gains taxes for 61% of its revenues, while federal revenue sharing will contribute 11%, property taxes, 9%, and vehicle taxes, 6%. Other revenues include user fees, fines and gambling duties. The city devotes 26% of its budget to education, 22% for health, 17% for public services and infrastructure, 16% for social welfare and culture, 12% in administrative costs and 4% for law enforcement. Buenos Aires maintains low debt levels and its service requires less than 3% of the budget.