Argentina - the fastest growing e-commerce country in the world

The COVID-19 pandemic and the resulting restrictions have caused drastic changes in business models and an increase in e-commerce sales around the world, with Argentina being a standout.

British publication The Economist noted that Argentina has seen the fastest e-commerce growth in the world during the pandemic, thanks to "high internet penetration, smartphone ownership and financial inclusion, as well as the recent Knowledge Economy Law."

The publication said the coronavirus pandemic and the resulting restrictions on activity have led to dramatic changes in business models and increased e-commerce sales around the world.

According to data from US market research firm eMarketer, global e-commerce sales grew 28% in 2020 to $4.3 trillion; while e-commerce in all regions saw double-digit growth, growth in Latin America was particularly significant.

According to the document, The Economist states that "Argentina became the fastest-growing e-commerce market in the world by 2020," thanks to a number of structural factors: high penetration of the internet and smartphones, as well as financial inclusion.

The publication also noted that "all signs point to the near-term outlook for e-commerce remaining positive."

The Economist said: “We expect e-commerce to retain its vibrancy in the long term; while there may be some disruptions towards the end of this year and early next as Argentina’s economy reopens, we believe that the online consumption habits formed during the Covid-19 outbreak are likely to survive the pandemic itself.”

At the same time, the publication added, "companies will also be interested in retaining (and expanding) their digital footprint, especially since profit margins on online sales tend to be much higher than those in traditional retail."

In October 2020, the Argentine government passed a new Knowledge Economy Law, providing tax incentives to companies engaged in high-tech industries to promote the provision of digital goods and services.

However, there are still risks to Argentina’s relatively optimistic outlook for e-commerce, largely due to an undesirable policy mix. The Economist noted: “The measure conflicts with a number of other policies implemented by the national executive, including broad-based price controls, foreign exchange controls and import taxes.”

Despite this, Argentina remained the fastest growing country in e-commerce in the world in 2020.

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