Growth in Argentina is no longer just a hopeful expectation—it’s a reality. With a stabilized macroeconomy, Argentina’s businesses find compelling reasons to invest, while consumers are encouraged to spend. A steady exchange rate and a government firm that maintains public accounts have repositioned the country, drawing closer scrutiny from the global stage.

Dear ArgenGrowther,

As every week, we present the key data from the past week and delve into various aspects of our beloved Argentina to assess their impact, understand what's happening, and make better decisions. The newsletter is divided into four main sections:

1. Data

2. Understanding What's Happening in Detail

3. Actionable Items

4. Brief Reflection

Financial ArgenGuide:

#data

What Do These Economic Indicators Mean? Positive or Negative?

Spoiler: extremely positive. Optimism now translates into real-world results, validating that we’re not just living on expectations. The country risk index and bond markets reflect this. The government’s steady control remains evident. And Argentina’s Central Bank? It’s doing what it’s been doing weekly—purchasing foreign currency. Argentina is making waves globally, this time for positive reasons.

Understanding What's Happening in Detail

Exchange Rates: The Peso vs. the Dollar

Argentina’s Central Bank reduced interest rates last week, and the dollar remained stable. This signals that the government’s efforts to converge different exchange rates toward the official rate are stronger than ever, supporting a unified exchange rate.

The conclusion of the initial phase of currency amnesty has injected over USD 20 billion into the system—more than seen during Macri’s presidency peak. Now, we await the dynamics of the upcoming weeks to see how these numbers stabilize within banks.

This increased dollar stock expands banks' lending capabilities, potentially giving a much-needed boost to economic Activity. In October, Argentine companies issued USD 2.3 billion in debt—a monthly figure that surpasses the entire issuance of 2023 or 2022. This positively impacts the balance of payments and the Central Bank, which has long since stopped selling foreign currency.

Trump’s recent victory in the U.S. impacts Argentina’s “Strong Peso” policy in two ways. It provides relief, as a Republican win boosts Argentina’s chances for favorable financing and debt rollovers. However, it also exerts pressure by strengthening the dollar, potentially weakening emerging currencies like the peso. Argentina, with an eye on Brazil’s economy, must continue to navigate these global changes carefully.

Public Accounts Improvement: Argentina’s Fiscal Recomposition

Argentina’s Ministry of Deregulation continues to alleviate public expenses, such as recent cuts to INCAA, which transformed a USD 2 million operational deficit into a USD 4 million annual surplus. Additionally, dissolving the Social Capital Trust Fund (FONCAP) will save the state $100 million monthly, with 74% of costs attributed to salaries and social charges.

National Public Sector Debt Improvements

Peso debt has been a focal point of Argentina's economic restructuring. It has grown stronger throughout the year with improved maturity profiles and indexation percentages.

Currently, 29% of Treasury debt in pesos is unindexed, compared to just 5% in April. Short-term debt (up to 6 months) represented 28% of GDP in January, but now sits at 11%. Recent government actions have lengthened maturities, enhancing Argentina’s peso debt profile. Stabilizing the peso debt curve is critical to achieving healthy, robust financing and potential relief from currency controls.

Government Bond Auctions

In last week’s auction, only CER instruments were offered, with an approximate 2026 rate of CER +10%. With bids totaling $2.17 trillion, $1.53 trillion was awarded; bond conversion transactions accounted for $3.43 trillion (38.25% participation), extending the average life by 1.38 years and reducing the coupon from 4.25% to 0%. Though the sums may appear small, it’s notable that the government is borrowing at a real rate of 10%—suggesting it views this debt as more affordable than fixed-rate options.

Argentina’s Economic Activity Levels Surge in 2024

The government has stabilized much of the macroeconomy in less than a year, leading to a robust economic recovery. The recession is over, and economic Activity has surpassed last December’s levels. In October, a majority of economic sectors reflected this positive shift.

Econométrica reports that Argentina’s industrial Activity has surpassed December 2023 levels, although the September year-over-year IPIM remains weak at -6.1%, with a 2.6% month-over-month growth. Construction remains down at -24.8% year-over-year but also shows a 2.6% monthly increase. Argentina’s mining industry, buoyed by crude oil, shows promising growth at +4.5% year-over-year and +3.7% monthly.

Credit availability plays a significant role in this recovery, continuing to grow rapidly.

Between January and September 2024, Argentine SME exports increased throughout nearly all regions, with only Patagonia showing a slight decline. The NEA, Cuyo, Buenos Aires, and CABA experienced especially robust growth. Argentina’s beef export sector has also reached a historic high, underscoring the nation’s potential as an export powerhouse.

Economic Activity Growth = Inflation Growth
Reduced Bureaucracy = Lower Costs

On Argentina’s Labor and Public Opinion Front

Recent strikes and union disputes seem to favor the government. Following disruptions at Aeroparque, the government has moved decisively, firing those responsible and deregulating ramp services. Resolution 49/24 by the Secretary of Transportation allows any technically qualified company to offer ramp services, ending the Intercargo monopoly. Public support for these measures is strong, and after a sharp decline in approval ratings in September, Javier Milei’s approval rating rebounded in October to over 50%.

Also, wages are back to November 2023, and monthly employment growth has resumed. With structural adjustments and a growing economy, 2025 appears promising for Argentina’s government.

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Actionables for Investors and Decision-Makers

Country risk is plummeting, a development welcomed by the government. Once highlighted by Minister Caputo, this lagging indicator now appears to confirm the strengthening of Argentina’s public accounts. Ending the week at 850 points raises hopes for public debt refinancing.

As country risk approaches 600 basis points, Argentina’s government may explore swapping short-term bonds for longer ones, accelerating a virtuous cycle. Here’s how: A lower country risk improves the government’s prospects of issuing new debt at lower rates, allowing for short-term debt refinancing (perhaps with a premium swap) and easing imminent maturities. Reducing these near-term liabilities could further improve Argentina’s sovereign debt payment prospects, perpetuating the cycle. This may be an ideal time for those interested in Argentine risk with a positive outlook—though not for the faint-hearted.

Investor Market Sentiment: Favorable Bonds Across the Curve

Investors continue to buy Argentine sovereign bonds across the curve, with no remaining bonds offering spreads above 10% against U.S. bonds. Extraordinary yields persist at around 13-15%, down from over 20%.

This local improvement in Argentina unfolds within a complex global context. The Fed’s recent 0.25% cut in short-term rates contrasts with the long-term hike following Trump’s victory, raising U.S. 10-year rates to about 4.3%. This political alignment with Trump may facilitate Argentina’s debt refinancing with international organizations—a vital factor for coming years. Although emerging market debt faces challenges, Argentina is standing strong.

In the peso market, inflation forecasts are adjusted weekly. October’s CABA CPI at 3.2% likely marks a ceiling for the national CPI. The CER/Fixed trade remains popular, and with narrow margins, timing is crucial.

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Brief Reflection on Argentina’s Positive Economic Outlook

The dark days appear to be over as Argentina moves toward optimism and growth, underscored by increasing investments and renewed confidence in the peso. Something unimaginable a year ago—the peso as a stable asset—has now become a foundation of Argentina’s future. With a stable currency, controlled inflation, and a solid macroeconomic framework, Argentina is on track to avoid major economic disruptions for the first time in decades. The government’s fiscal, monetary, and exchange policy program has succeeded remarkably.

Argentine asset revaluation has been significant, but opportunities remain. In a wealthy and investment-rich Argentina with abundant dollars, it’s logical that the country would become expensive in dollar terms—a trend already evident in specific sectors. Credit availability accelerates growth, creating opportunities for those who act swiftly. Argentina’s path to prosperity is unfolding.

As Argentina’s risk premium shrinks, business profits should follow. Can Argentina’s business community adapt? A streamlined business environment is essential for success.

If you liked it, I invite you to write to me, comment, share this short column, and reflect on our living moments.

Nau Bernués
Founder, ArgenGrowth

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