Economic history of Argentina assumed power, inflation was equivalent to an annual rate of 5000%, and output had declined sharply. In 1976, the era of import substitution was ended, and the government lowered import barriers, liberalized restrictions on foreign borrowing, and supported the peso against foreign currencies. That exposed the fact that domestic firms could not compete with foreign imports because of the overvalued currency and long-term structural problems. A financial reform was implemented that aimed both to liberalize capital markets and to link Argentina more effectively with the world capital market. After the relatively stable years of 1976 to 1978, fiscal deficits started
Economic history of Argentina economy soon recovered and, between 1996 and 1998, both output and employment grew rapidly and unemployment declined substantially. However, at the beginning of 1999, the Brazilian currency underwent a strong depreciation. The Argentine economy contracted 4% in 1999, and unemployment increased again. Exports grew from $12 billion in 1991 to $27 billion in 2001, but many industries could not compete abroad, especially after Brazil's devaluation. The strong, fixed exchange rate turned the trade balance to a cumulative US$22 billion in deficits between 1992 and 1999. Unable to devalue, Argentina could only become more competitive if prices fell. Deflation came from