Harrods Bueons Aires, the only other Harrods in the world besides the department store in Knightsbridge, London, is to reopen, a symbol of Argentina's nascent economic recovery.

The Buenos Aires Harrods, which opened in 1914 in a grand, belle époque building on Calle Florida, an elegant pedestrianised shopping street, will be back in business in September, after languishing in near-dereliction since debts forced its closure in 1998.

Atilio Gibertoni, who has controlled it since the 1980s, has since clung doggedly to the store, winning a legal battle against Mohamed Al Fayed in 1998 to retain the South American rights to the Harrods brand. Mr Fayed tried to recover sole rights to the brand after paying £210m for the Knightsbridge store in 1983, but the House of Lords threw out the case in 1998.

The relaunch is a sign of Argentina's fragile recovery after the worst crash of its history 18 months ago, when people took to the streets banging pots and pans and looting supermarkets. Twenty-seven people died in riots.

Argentina's prospects began to improve slowly after the peso - which had lost two thirds of its value - was unpegged from the dollar last February. Exports of meat, grain and wine have recovered and tourists have returned in big numbers. Millions of the poor and unemployed still scrape a living, relying on soup kitchens, but the shopping centres are thriving as tourists snap up leather bargains.

Label-conscious Argentinians, who can no longer afford to shop in Miami, Paris or London on peso salaries, but have some $100bn (£60bn) banked outside the country, indulge their passion for imported goods at home.

In this new climate, Mr Gibertoni has persuaded a group of Italian investors to spend $2m to return Harrods Buenos Aires - traditional purveyor of French perfume, Italian suits and Wedgwood china - to its former splendour.

Repairs are being carried out against the clock to restore ornate plasterwork, marble staircases, polished cedar floors and large wrought-iron lifts. Whether the $2m stretches to replacing the bronze bas-relief plaques that were stolen from the façade on Calle San Martin, after the store closed as recession bit in 1998, remains to be seen.

Nostalgic Porteños, as Buenos Aires' citizens are known, look forward to the reopening. "I remember being taken there to be fitted out for my first suit there when I was 15," says Mariano Monrad, 36. His father Mariano, now 70, was the same age when he got his first suit in Harrods.

The fortunes of the store have mirrored that of Argentina. When Harrods Buenos Aires opened, it was among four subsidiaries of the London store, the others being in Manchester, Paris and Berlin. At that time Argentina, "the grainstore of the world" was the sixth-richest country on earth. The Buenos Aires store immediately became a symbol of exclusivity and refinement among Argentine high society.

Amelie Zanini, 89, remembers Harrods in 1930 when valets in green and gold brocade suits would open the car doors of patrician Argentine families and usher them in to take cream tea in the grand salon, where the shop's own orchestra played jazz. "All Argentine high society took tea at Harrods; it was a very posh thing to do." She recalls taking her children to the lavish Harrods Christmas party, where a Father Christmas would give out toys in Buenos Aires' sweltering December heat.

In the golden years of the 1940s and 1950s, when the Perons were in power and the country had got rich exporting food to a war-torn Europe, 45,000 people a day passed through the store. Eva Peron was a regular, always dressing impeccably in the height of European fashion like the Argentine high society she despised, while professing to identify with the "shirtless" masses.

During the 1960s, the shop became independent from the London Harrods Group, changing its traditional jagged signature for a curly version.

Argentina's hyperinflation crisis in 1989 was the start of its decline, when Mr Gibertoni, got into debt and was forced to close it floor by floor. Its fate was sealed as it struggled to compete during the 1990s with the US-style shopping centres that sprang up in the city. By the time it closed in 1998, only 50 people worked on the last floor.

The store will reopen with 80 clothing concessions, a café and bookshop. Modern, white lacquer units will house fashionable clothing concessions alongside the traditional departments with their upholstered wooden furniture, polished floors, chandelier lighting and velvet curtains.