Argentina Economic Outlook. October 2025

Summary

Since July, a combination of interest rate volatility and the electoral outcome in the Province of Buenos Aires has generated renewed tensions in financial markets. Higher rates, exchange rate pressures and weaker confidence have led to a slowdown in economic activity.

Key points

• Key points:
• Global growth is moderating due to greater protectionism, tighter immigration policies and geopolitical tensions. The slowdown in the U.S. will allow the Fed to cut interest rates in 2026. The risk map tilts toward more adverse scenarios amid global fragmentation and threats to the Fed’s autonomy.
• The Argentine economy lost momentum in the second half of 2025, widening performance gaps across sectors. Formal employment has stagnated, while informality has increased, cushioning unemployment but deteriorating job quality. Real wages are beginning to recover, albeit unevenly.
• Fiscal balance remains solid, supported by spending moderation and firm revenues driven by activity and external trade. A primary surplus of 1.6% of GDP is expected in 2025, exceeding the IMF target.
• The elimination of LEFIs and the electoral results in Buenos Aires Province intensified financial volatility, raising interest rates and adding pressure on the exchange rate. We expect real rates to remain positive and the spread to narrow gradually. The exchange rate is likely to stay near the upper band, supported by the U.S. Treasury’s backing.

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