Just When We Thought It Couldn’t Get Worse: A Divine Black Swan

Headwinds turned into a storm, and Argentina's market got smashed. A Friday of fiery red wiped out everything—Argentine stocks, sovereign bonds, the dollar, Brazil, and China. The global trade reshuffling brings economic pain and, for now, few benefits. There are still no updates from the IMF, and investors are looking at Argentina with growing skepticism. The government continues with its economic program—will this newly born black swan be the force to change it?

Dear ArgenGrowther,

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. Brief Reflection

2. Data

3. Understanding What's Happening in Detail

4. Actionable Items

Brief Reflection

Will the black swan gain strength?. U.S. President Donald Trump is shaking global trade markets with his aggressive tariff policy. With sudden changes and unpredictable moves, he has introduced high levels of market uncertainty. The global stock and bond markets are reacting not only to the tariffs themselves but to the looming fear of a worldwide recession. Higher tariffs mean lower global GDP growth, reduced corporate earnings, and tighter financial flows.

This international shock is hitting Argentina hard—but there’s a limit. Why? Because Argentina has capital controls in place. These financial regulations prevent massive exchange rate movements, reducing official and parallel dollar market volatility (like the MEP). The so-called "Strong Peso" remains shielded, maintaining some macroeconomic stability. Imagine this level of global volatility without FX controls—dollar demand would spike, inflation expectations would soar, and business pricing would collapse. Being locked in isn’t ideal, but in a financial storm, it brings stability.

Fortunately, the real economy does not react as fast to financial market shocks. If markets stabilize quickly, Argentina may weather the storm with minimal damage. If the downturn persists, however, it could stall private investment and delay the country’s economic recovery. Oil prices are now crucial. Argentina aspires to become a key energy exporter through Vaca Muerta, but falling oil prices raise concerns about long-term profitability. At under $60 per barrel, energy investment feasibility becomes questionable.

Will Argentina become a prime destination for foreign investment and showcase its commitment to economic growth? Are we closer to that future? Today, with global headwinds, the answer is no.

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#data.

Is Argentina's Economic Shift Positive or Negative?

Spoiler alert: Negative. A very tough week for global financial markets. Trump’s renewed trade stance triggered a violent “flight to quality” with massive outflows from emerging markets like Argentina. Country risk soared, equities dropped, sovereign bonds fell, FX reserves declined, and the peso weakened by nearly 3% against the dollar. Any good news? Argentina’s fiscal discipline is holding for now.

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Dollar and the Strong Peso

Things just got more complicated. Not due to pessimism, but facts: Argentina’s Vaca Muerta energy reserves lost 15% of their market value in just one week. In a global tug-of-war, the sharp decline in crude oil is particularly concerning for a country positioning itself as a major energy exporter. The estimated trade surplus from energy dropped from $8B to $6.8B in a week—$1.2B less for a dollar-starved country.

We're still waiting for foreign currency inflows from the IMF and soybean exports. Grain liquidation is delayed, and the IMF agreement remains elusive. Meanwhile, Argentina’s Central Bank continues to sell foreign reserves, albeit less than before. That hemorrhage seems to be slowing, and agricultural exports should bring a reversal soon.

This week also saw turbulence in emerging market currencies. Argentina was affected, but FX controls helped reduce volatility.

Restoring Public Finances

Fiscal austerity ("the chainsaw") continues, and increased tax revenue is helping the government maintain its economic stabilization plan. While confidence in Argentina’s budgetary policy grows, doubts remain about its currency policy. All eyes are on the Central Bank, which begins April still in deficit.

National Public Sector

March tax revenue rose +10% YoY in real terms, dispelling doubts about eliminating the PAIS tax. The fiscal anchor is solid.

The government also dissolved the Federal Electricity Transport Fund. An audit by SIGEN revealed systemic mismanagement: irregular contracts, delayed infrastructure, untracked transfers, and unaudited financials. The Energy Secretariat under the Ministry of Economy will now oversee those operations.

Economic Activity

So far, financial instability hasn’t impacted Argentina’s real economy. March retail sales rose 10.5% YoY and 0.1% MoM, totaling a 19.4% increase for Q1 2025, per CAME. We’re waiting to see how global trade shifts and tariffs evolve. Meanwhile, exports are rising and hitting record highs. Exchange rate stability, lower taxes, and reduced business costs translate into economic gains. The harvest is progressing well, with further potential for growth.

Argentina’s average tariff rates have recently declined, but Trump’s trade shift may reverse that. U.S. average tariffs could rise from 2.2% to 10%, a fivefold increase.

Will Vaca Muerta be Argentina’s economic savior, or will falling oil prices derail investments? Forecasts point to strong energy export potential, but continued investment is essential. At $60 oil, Vaca Muerta remains viable—but just barely.

The Street

Argentina’s macroeconomic stability is finally impacting poverty and indigence. INDEC reported that in H2 2024, poverty dropped to 38.1% and extreme poverty to 8.2% and 2%, the lowest since 2022. Compared to H1 2024, these figures represent a 14.8% drop in poverty and nearly 10% in indigence.

Why? Rising real wages and falling inflation.

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Actionables

Massive selloff. Markets collapsed on Friday, ending a disastrous week. Global indices were deep in the red, with volatility at pandemic levels. Equities, bonds, and currencies all suffered—except for U.S. 10-year Treasuries, which rallied sharply. The flight to quality was total. One stat sums it up: Friday set a new record for trading volume on the U.S. stock exchange.

For Argentine peso investors, it wasn’t any better. A weakening peso, rising rates, and high inflation created a dangerous mix. Still, real interest rates remain attractive. If you're thinking in pesos and need local exposure, inflation-indexed CER bonds still offer a +9% real return.

Argentina’s sovereign debt suffered harsh losses. The market now demands hard dollars upfront before investing—no more speculation. With country risk above 900 bps and a strong fiscal surplus, the missing catalyst is a finalized IMF deal. The government’s fiscal numbers inspire confidence, but Central Bank data does not. Welcome to Argentina—not for the faint of heart.

If you enjoyed this analysis, please share your thoughts, comments, and feedback. Let’s keep the conversation about Argentina’s transformation alive.

Nau Bernués
Founder, ArgenGrowth

PS: Follow me on Twitter and LinkedIn, and let's discuss the Argentine economy's challenges