Updated: Oct. 24, 2011

Argentina rebounded from its economic crisis of 2001 with steady economic growth, disrupted only briefly by the global slowdown triggered by the financial crisis of 2008.

In 2010, the economy grew by 9.2 percent, the fastest in Latin America. And as its economy recovered, so did the political prospects of President Cristina Fernández de Kirchner, who was re-elected by a wide margin in October 2011.

Mrs. Kirchner, who succeeded her husband, Néstor Kirchner, in 2007 to become the country’s first female president, made a remarkable comeback. By 2009, her combative style, highlighted by a heated dispute over agricultural export taxes, sent her approval ratings below 30 percent, and economists predicted doom for the subsidy-heavy economic model first orchestrated by Mr. Kirchner.

By the time of her re-election campaign, by many measures Argentina was booming: the economy was expected to grow by 8 percent this year, the fastest growth in Latin America; employment had reached record levels; and the poverty rate had been cut by more than half since 2007, the government said. The country continues to benefit from heavy government spending, high commodity prices and strong demand from China for its agricultural products.

Still, in re-electing Mrs. Kirchner, voters seemed willing to look past some troubling signs. Inflation has soared to over 20 percent in the past year, second only to Venezuela’s among major Latin American economies, economists said. And the government has continued to govern with a heavy hand and little tolerance for opponents, including among the news media.

Opposition candidates tried to seize on those issues but gained little traction with voters.

Background

During the 1990s, seeking to tame hyperinflation, Argentina had tied the value of its peso to the American dollar — a “convertibility” strategy that proved unsustainable because of rising global interest rates. The country privatized many industries, which led to high unemployment but also made Argentina’s economy more efficient.

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By 1999, however, it was clear to most economists that Argentina was marching inexorably toward a default and devaluation. The number of people under the poverty line was growing — it peaked at more than 50 percent of the population in 2002 — and unemployment was soaring.

Social tensions rose. There were eight general strikes in Argentina in 2001, with looting and thousands of roadblocks. Huge lines formed outside many European embassies as waves of Argentines fled their country.

In December the government fell, and the departing president fled as a riot raged below. Over the next 10 days, four presidents assumed power and then quickly resigned before a fifth, Eduardo Duhalde, declared the currency devaluation. A short time later, Congress formally approved the debt default that was already a de facto reality.

In 2003 Mr. Kirchner was elected to succeed the interim president, Mr. Duhalde. Mr. Kirchner embarked on a new economic model — the one that his wife, continued to follow today. Its pillars are sustaining a weak currency to foster exports and discourage imports, and maintaining fiscal and trade surpluses that can be tapped for financing government and paying down debt.

The Argentine government waited until 2005, when its economy was already in recovery, to conduct the first of two debt restructurings. Nongovernment foreign investors — the biggest included pension funds from Italy, Japan and the United States — took haircuts costing them two-thirds of their investments.

Notably, the one creditor that was paid back in full — in 2006 — was the International Monetary Fund, to which Argentina owed $9.8 billion dating to the 1990s.

Since paying off the International Monetary Fund, Argentina has not borrowed from the fund. That enabled the Kirchner governments to avoid the agency’s typical prescription of cutting state spending.

The Argentine government has maintained hefty subsidies on energy and some food to avoid public discontent — steps that would be anathema to the monetary fund. But high commodity prices have helped let Mrs. Kirchner maintain popularity at home through generous government outlays.

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