Foundations for Growth and Competitiveness 2026

Argentina

Despite its natural resource abundance and a well-educated workforce, Argentina’s economic performance has lagged that of comparable economies. A volatile macroeconomic environment, characterised by a series of boom-and-bust cycles, has undermined confidence, resulting in one of the lowest investment rates in Latin America. Informal employment remains high in international comparison, hindering the optimal allocation of resources across the economy. Labour productivity has been falling over the last decade, leaving Argentina even further away from the OECD average.

Against this difficult background, Argentina has recently embarked on an ambitious reform process, which has started to pay off. Continuous efforts will be necessary to phase out distortionary taxes that hinder investment and to improve the efficiency of public works. Enhancing the flexibility of labour market regulations and lowering non-wage labour costs would help tackle labour market informality. Continuing to reduce barriers to domestic and international competition would foster productivity growth.

Economic performance

Gaps to the average of the upper half of the OECD countries

Source: Panel A: OECD, Economic Outlook database; Panel B: OECD, Labour Force Statistics database; Panel C: OECD, Economic Outlook and Productivity databases; Panel D: OECD, Economic Outlook and Annual National accounts, GFCF by assets databases.

Selected policy gaps

Source: OECD calculations based on the Foundations for Growth and Competitiveness database.

Taxation: Make the tax system more growth-friendly

Increases in public spending and urgent financing needs over the years have often been financed with new distortionary taxes. These taxes have left their mark on investment and consumption decisions and the allocation of resources across the economy. One of the most distortionary taxes is a financial transaction tax creating incentives to settle payments in cash. Another highly distortionary tax is a provincial business turnover tax creating artificial incentives for vertical integration. In contrast, income taxes and the VAT have narrow tax bases and account for a smaller share of tax revenues than in OECD countries.

Recommendations

✓ Let the financial transaction tax expire in 2027 and eliminate other distortive transaction taxes such as stamp duties.

✓ Consolidate the provincial business turnover taxes with the VAT into a dual value-added tax with harmonised rules.

✓ Reduce the basic allowance of the personal income tax and limit VAT exemptions and reduced rates.

Physical infrastructure: Strengthen the integrity of public procurement processes

The quality of infrastructure is low in international comparison. In the transportation sector, only 32% of road infrastructure is in good condition. Train derailments are frequent given the poor state of freight railways. The port of Buenos Aires has an average turnaround time close to two days and ships often face waiting times before entering the port. Increasing private participation in the construction and operation of infrastructure could help to develop high-quality infrastructure, while increasing the efficiency of public spending. Yet, this requires significant institutional capacities.

Recommendations

✓ Develop a general public procurement law, based on the Recommendations from the OECD Council on the Governance of Infrastructure, and promote the use of e-procurement.

✓ Make sure that procurement offices have adequate human resources to conduct their activities.

✓ Improve coordination between competent bodies and across municipalities to grant permits, authorisations and rights of way.

Labour market: Enhance the flexibility of labour market regulations

A sizeable share of Argentina’s jobs and economic activity has traditionally been outside the formal economy. Informal workers have lower income stability and lower earnings, even though they have access to social protection through the social security system. Informality also represents unfair competition for formal firms, limiting growth opportunities and distorting the allocation of resources across the economy. Labour market regulations are more stringent than in the average of the OECD and Latin America, increasing the cost of formal employment and limiting opportunities for less productive workers.

Recommendations

✓ Simplify administrative procedures for collective dismissals and reduce the amount of severance payments mandated by law.

✓ Develop objective and predictable criteria for minimum wage adjustments, based on productivity developments.

✓ Introduce temporary opt-out clauses allowing the suspension of sectoral level agreements for firms facing economic difficulties.

Competition: Promote more competitive domestic markets

Despite notable recent reforms, regulation of product markets in Argentina remains very restrictive according to the OECD Product Market Regulation indicators. Entrepreneurs are still subject to some onerous and time-consuming procedures when starting their businesses. Barriers to entry persist in a range of professional services. The independent National Competition Authority and its subordinated bodies mandated by the competition law still have not been created, and the resources of the current competition authority are limited. Moreover, the adoption of a pre-merger review regime mandated by the competition law has not taken place yet. Regulations are not systematically assessed.

Recommendations

✓ Continue streamlining business regulations to reduce entry barriers in services sectors and lower administrative burdens for new firms.

✓ Create an independent, appropriately funded National Competition Authority.

✓ Establish the systematic use of regulatory impact assessments.

International trade: Increase openness to international trade

Argentina’s economy is less integrated into world markets than comparable emerging economies, in terms of imports, exports, and participation in global value chains. Despite recent improvements, import barriers and export taxes remain high in international comparison. Export growth has not matched the expansion of export markets, and there are fewer firms exporting and products exported. Argentina has much to gain from opening to international trade. Domestic firms would be able to obtain higher-quality intermediate goods and more advanced equipment. Stronger exports, on the other hand, would help reducing macroeconomic vulnerabilities, boosting investors’ confidence.

Recommendations

✓ Continue reducing tariffs, especially on intermediate inputs and capital goods.

✓ Continue streamlining non-tariff trade barriers, including cumbersome technical regulations or technical regulations not aligned with international standards.

✓ Phase out export taxes.

Recent progress on structural reforms

Argentina has recently made significant progress towards stabilising the macroeconomy and improving the business environment. Primary fiscal surpluses have been recorded for most of 2024, something Argentina had not seen since 2010, helping to gradually restore investors’ confidence. Most currency and capital controls were lifted in April 2025 and a new incentive regime for large investments has been introduced. Product market regulations are being simplified and modernised, while import processes have been streamlined and waiting times for approvals reduced. Keeping up the reform momentum will play a crucial role to sustain high growth levels in the coming years.