Argentina Economic Outlook. December 2025

Summary

The midterm election results reaffirmed social backing for the administration's economic plan, driving an improvement in expectations consistent with our GDP growth forecasts of 4.5% for 2025 and 3.0% for 2026. This supports the continuity of the fiscal-monetary anchor and the ongoing disinflation process.

Key points

• Key points:
• Argentina’s economic outlook has improved following confirmation of public support for the economic program. The election results strengthened the government’s political capital to advance its reform agenda (currently focused on labor and fiscal reforms) while maintaining fiscal austerity. Economic activity regained momentum in 4Q25, although labor market conditions remain stagnant.
• Monetary Policy is undergoing a normalization process after a highly volatile 3Q marked by interest rate swings and pre-election uncertainty. The central bank (BCRA) is seeking to implement a more transparent and predictable framework, maintaining control of monetary aggregates as its primary objective while reducing interest rate volatility and lowering reserve requirements.
• The modification of the exchange rate regime—introducing inflation-adjusted bands—together with the reserve accumulation program announced by the BCRA, is a step in the right direction. However, the current exchange rate level leaves only a narrow buffer relative to the upper band, which may limit the consolidation of the process.
• The government is moving forward with its return to international capital markets to roll over debt maturities. It has already issued a USD-denominated bond for the first time since 2018, and sovereign risk stands at around 600 basis points. We expect liability management operations during the summer to extend maturities.

Geographies

Topics

Tags