OECD Economic Outlook, Volume 2025 Issue 1

Argentina

GDP growth is projected to be robust, at 5.2% in 2025 and 4.3% in 2026. Private consumption and investment will continue to recover, sustained by higher real disposable incomes, more favourable financing conditions and an improving business environment. The recent removal of capital restrictions will support further improvements in economic sentiment and investment. Inflation will continue to decline, albeit at a slower pace. Amid rising imports, the current account will deteriorate.

Monetary policy will need to remain tight to maintain inflation on a firmly downward path. Fiscal policy should build on the recent successful adjustment with more sustainable consolidation measures, to maintain strong fiscal outcomes. This includes phasing out subsidies, and raising public-sector efficiency, while replacing distortionary taxes by broader income and consumption tax bases. Recent efforts to reduce the regulatory burden will boost productivity and should continue, complemented by stronger incentives for the formalisation of workers and firms.

A strong economic recovery is underway

After a strong contraction in the first half of 2024, activity bounced back to growth of more than 18% in annualised terms in the third quarter and over 5% in the last quarter of 2024. The recovery was driven by private investment, consumption, and exports. Short-term indicators point towards further improvement. Credit to the private sector is recovering. Consumer confidence and business sentiment have improved. Annual inflation has fallen from 211% at the end of 2023 to 47% in April 2025. Unemployment was 6.4% in the fourth quarter of 2024, down from a peak of 7.7% in early 2024. Real wages have already surpassed their October 2023 level.

Argentina

1. Average of the monthly values of each quarter.

Source: Centro de Investigación en Finanzas (CIF) de la Universidad Torcuato Di Tella; Vistage; and OECD Economic Outlook 117 database.

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Argentina: Demand, output and prices

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There was a current account surplus of 0.9% of GDP in 2024, after a 3.0% deficit in 2023. New gas production is helping to reduce energy import dependence, and the sector now generates trade surpluses. Exports to the United States account for only about 9% of Argentina’s total exports, or around 1% of GDP, and have not been significantly affected by US tariff increases so far. Argentina’s own import tariffs and non-tariff trade barriers have been reduced in 2024 and further reductions are expected in 2025.

Macroeconomic policies have become more restrictive

An impressive fiscal adjustment has been achieved, resulting in a headline fiscal surplus of 0.3% of GDP in 2024. The government remains committed to achieving a positive primary balance in 2025, consistent with a balanced headline budget. Monetary policy has also helped the ongoing stabilisation by putting an end to excess money creation. The real benchmark interest rate has become positive and is expected to remain so. A new exchange rate regime has been announced, with the exchange rate floating within bands that will widen by 1% per month. A recent agreement with the IMF will provide additional funding and help to rebuild currency reserves. The removal of currency restrictions has improved confidence and investment incentives.

The economy is set for a robust recovery, but important challenges still lie ahead

The economic recovery is expected to continue, with GDP growth of 5.2% in 2025 and 4.3% in 2026, driven by higher private consumption and investment. Private investment will gain further momentum as currency and capital controls have been lifted. Real wages will continue improving as inflation declines, supporting private consumption. Export growth will slow compared to 2024. Exports have been affected by the recent real appreciation of the currency. Imports will continue their strong recovery, sustained by higher purchasing power and lower import barriers. Headline inflation is projected to slowly continue its downward path, falling to 37% in 2025 and 15% in 2026, sustained by lower import costs, balanced public accounts and positive real interest rates. Higher international interest rates could make it more difficult to accumulate international reserves. Higher US tariffs could result in lower export growth, but export prospects in the agricultural and livestock sector could potentially benefit from changing trade patterns.

Further efforts are necessary to sustainably improve the fiscal position

Sustaining better fiscal outcomes will require deeper reforms of taxes and expenditures. Expanding the personal income tax base could raise revenues in a progressive way and would allow distortionary and inefficient taxes that hinder investment to be reduced. Eliminating VAT exemptions could generate additional revenues. Despite recent progress, trade barriers remain high and lower import barriers on intermediate and capital goods could boost investment and export competitiveness. Regulatory processes have been simplified, but entry barriers in services sectors could be reduced further.