EconoAtlas Monthly Macroeconomic Report

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Summary

Institutional overview of Argentina’s macro regime: stabilization progress, remaining constraints, and the key conditions required for a more durable expansion.

Inflation Disinflation advanced
Fiscal Material improvement
Activity Technical recovery

Institutional Narrative

Argentina’s macroeconomic environment in 2025 reflects a substantive process of adjustment and stabilization. Inflation has decelerated markedly, fiscal performance has improved materially, and sovereign risk indicators have shown partial normalization. However, the recovery in real activity remains limited, the external constraint continues to be binding, and social and political confidence remains uneven.

The current phase is best characterized as a technical recovery rather than a broad-based expansion. Economic activity has improved from depressed levels, but domestic demand remains weak, private consumption is subdued, and labor market conditions continue to adjust gradually. The recent improvement in the external balance appears largely cyclical in nature, while international reserve levels still do not provide a significant margin of safety.

On the monetary and financial side, conditions have stabilized alongside the disinflation process, but there is limited evidence of a full normalization of money demand or credit dynamics. Financial intermediation remains constrained, and the transmission of monetary conditions to the real economy is still weak.

The fiscal consolidation underway represents a meaningful change in policy orientation. Nevertheless, its sustainability is contingent upon political support and social tolerance. The compression observed in sovereign risk spreads reflects improving perceptions, but credibility remains in the process of being established rather than fully consolidated. Confidence in the authorities is present, but remains conditional and sensitive to political and economic developments.

Overall, Argentina enters 2026 in a more stable macroeconomic position than in the recent past. However, the normalization process is incomplete and remains highly dependent on continued policy discipline, institutional credibility, and effective governance. The trajectory over the coming year will be critical in determining whether the current stabilization effort can be consolidated or whether renewed volatility emerges.

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Economic Activity & Labor Market

A structured assessment of the cycle using complementary signals: monthly activity (EMAE), quarterly output (GDP), domestic demand (private consumption), and labor market conditions (unemployment).

Cycle Technical recovery
Demand Still constrained
Labor Gradual adjustment

Cycle Overview

Argentina enters 2025 in a context of partial recovery following the deep contraction observed during 2023–2024. Aggregate activity has improved, but the recovery remains uneven and incomplete. Domestic demand is still constrained and labor market adjustment remains gradual, consistent with an early-stage technical recovery rather than a broad-based expansion.

EMAE — Monthly Pulse of Activity

The Monthly Economic Activity Estimator (EMAE) points to positive year-over-year growth across much of 2025, supported by base effects and partial normalization from depressed levels. The month-to-month profile, however, suggests intermittent loss of momentum in parts of the second half of the year, indicating that the recovery is not yet self-sustaining.

GDP — Quarterly Confirmation

Quarterly GDP data corroborate the improvement in activity. After contractions in 2023 and part of 2024, 2025 shows year-over-year gains, indicating a rebound in output. Nevertheless, the level of activity remains under pressure from cumulative losses, and the recent rebound appears more corrective than structural, with limited evidence of a sustained acceleration driven by investment.

Private Consumption — Domestic Demand

Private consumption remains comparatively subdued. While recent quarters show partial improvement, dynamics continue to be shaped by past inflation, real income compression, and uncertainty. Household behavior remains consistent with precautionary spending and balance-sheet repair, suggesting domestic demand is not yet a strong engine for growth.

Unemployment — Labor Absorption

Unemployment improved throughout 2024 but showed a modest deterioration in early 2025, returning to relatively elevated levels. Over a five-year horizon, labor market conditions remain constrained by structural fragilities and recurrent shocks. The current configuration is consistent with a recovery in activity that has not translated into robust labor absorption.

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Inflation & Prices

Assessment of the disinflation path, expectations anchoring (REM), and the interest-rate backdrop (BADLAR) as contextual evidence for nominal stabilization.

Inflation Marked deceleration
Expectations Gradual re-anchoring
Rates Disinflation-consistent backdrop

Cycle Overview

Over the past five years, Argentina experienced pronounced regime shifts in inflation dynamics, culminating in an episode of extremely high inflation. Through 2024 and into 2025, the nominal environment moved into a significant disinflation phase. While the magnitude of the deceleration is material, the inflation regime remains sensitive to credibility, policy discipline, and the persistence of inertial mechanisms.

Headline Inflation (YoY) — Disinflation Path

Year-over-year inflation shows a sharp deceleration from peak levels observed in 2024, extending through 2025. The pace of improvement is consistent with a transition away from an explosive inflation regime toward a still elevated, but materially more controlled, nominal environment. The next stage of disinflation is typically more challenging, as the remaining drivers tend to be inertia, indexation, and credibility rather than base effects.

Expected Inflation (REM, YoY) — Anchoring

Market-based expectations (REM) indicate a continued disinflation trajectory over the projection horizon, implying gradual re-anchoring. The profile suggests that the market anticipates further reductions in inflation, albeit at a more measured pace than the rapid deceleration observed immediately after the peak. This is consistent with a transition from “mechanical” disinflation to a more credibility-dependent phase.

Interest Rate Context (BADLAR) — Secondary Signal

The BADLAR rate provides a secondary financial signal consistent with the broader disinflation narrative. The trajectory in 2024–2025 suggests a reduction in nominal interest rates from extreme stress levels, although episodes of volatility indicate that the stabilization process remains sensitive to policy and confidence developments. Within this section, BADLAR is treated as contextual evidence rather than a primary inflation driver.

Interpretation — What Changes After the Peak

Following a high-inflation peak, the initial decline is often supported by base effects and policy tightening. As inflation falls, the marginal gains typically become harder to achieve. The remaining inflation tends to be explained by inertial pricing behavior, indexation practices, and the credibility of the nominal anchor. This implies a transition from rapid disinflation to a more gradual phase, where policy consistency and expectations management become central.

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External Sector & FX Constraint

Trade flows and reserve dynamics remain central to Argentina’s macro outlook. This section reviews exports, imports, the trade balance, and international reserves as core indicators of the FX constraint.

Exports Partial recovery
Trade Balance Improved, largely cyclical
Reserves Limited buffer

Cycle Overview

The external sector remains a binding constraint for Argentina’s growth model. Over the past five years, periods of temporary relief have often been driven by import compression rather than by sustained gains in export capacity. As a result, improvements in the external balance tend to be highly correlated with domestic activity conditions and remain vulnerable to shocks.

Exports — FX Generation Capacity

Exports show a partial recovery following the deterioration observed in 2023, consistent with normalization from a negative shock and improved external conditions. However, the recent profile does not yet indicate a structural transformation in export capacity. The outlook remains sensitive to commodity cycles, climate conditions, and the pace of investment in tradable sectors.

Imports — Activity Sensitivity

Imports are highly responsive to the domestic cycle. After a sharp contraction during the recessionary phase, imports rebound as activity stabilizes and as firms normalize intermediate and capital goods purchases. This pattern underscores a recurring constraint: stronger growth tends to raise FX demand quickly, reactivating external pressures unless export capacity expands materially.

Trade Balance — Strength or Weakness?

The trade balance has improved relative to the weakest points of the recent cycle, supporting the stabilization narrative. Nonetheless, a significant portion of the improvement appears cyclical, reflecting import compression and normalization effects. This distinction matters: trade surpluses generated by demand compression tend to be less durable than those generated by structural export expansion.

International Reserves — Policy Buffer

International reserves remain a key metric for assessing policy space and credibility. While reserve dynamics improved at points alongside the external adjustment, the overall buffer remains limited in the context of Argentina’s macro history. This implies a narrow margin for error, with reserves continuing to act as a binding constraint on the pace of normalization and on the economy’s resilience to shocks.

Implications — FX Constraint and Growth

The central implication is that growth remains conditioned by FX availability. Without sustained improvements in export capacity and reserve accumulation, stronger domestic demand tends to translate into higher import requirements and renewed external pressure. This mechanism contributes to the historical pattern of stop-go cycles and reinforces the importance of external accounts as a leading constraint on policy.

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Monetary & Financial Conditions

Integrated reading of monetary aggregates and domestic credit conditions. This section focuses on the monetary base, private M2 growth, and bank lending to the private sector as signals of liquidity, money demand, and financial intermediation.

Liquidity More contained stance
Money Demand Rebuilding, still cautious
Credit Gradual reactivation

Cycle Overview

Monetary and financial conditions in 2025 reflect a transition from acute nominal instability toward a more defensive stabilization phase. The disinflation process has improved the nominal backdrop, but money demand and financial intermediation remain constrained. The overall configuration is consistent with stabilization under a narrow margin of policy error, rather than full normalization.

Monetary Base — Liquidity Management

The monetary base provides a direct view of system liquidity under central bank control. Over the recent cycle, sharp expansions during stress episodes were followed by attempts to contain growth as the nominal regime adjusted. In 2025, the base appears more controlled, consistent with the broader stabilization narrative. Nevertheless, the stance remains defensive: liquidity management aims to preserve nominal stability while avoiding disruptions to activity and to the financial system.

Private M2 (YoY) — Money Demand Signal

Private M2 growth has slowed materially alongside the disinflation process, consistent with reduced monetary impulse and a partial rebuilding of real money balances. However, the profile suggests that confidence in the nominal regime remains conditional. In a high-inflation history, durable re-monetization typically requires sustained policy consistency and credibility over time.

Bank Lending to the Private Sector — Intermediation

Lending to the private sector has expanded in nominal terms, but the recovery in credit dynamics remains measured relative to the magnitude of prior contraction and the legacy of high inflation. This suggests that credit is not yet acting as a strong cyclical engine. The transmission of monetary conditions to the real economy remains weakened, reflecting still-cautious risk appetite and fragile household and firm balance sheets.

Interpretation — Stabilization vs. Normalization

A stabilized nominal environment is a prerequisite for deeper financial intermediation, but it is not sufficient. In practice, a transition toward normalization requires durable re-anchoring of expectations, improved confidence in domestic currency instruments, and a stronger real-side recovery that supports credit demand. As long as money demand remains cautious and credit expansion remains limited, monetary conditions will continue to reflect a defensive equilibrium.

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Fiscal, Sovereign Risk & Confidence

Integrated view of fiscal performance, debt dynamics, sovereign risk premia (EMBI), and confidence in the authorities. In Argentina, these variables jointly shape credibility and the sustainability of stabilization.

Primary Balance Material improvement
Sovereign Risk Compressed, still sensitive
Confidence Conditional support

Cycle Overview

Fiscal outcomes, debt sustainability, sovereign spreads, and political confidence form a single credibility system. In the recent cycle, shifts in these variables have repeatedly driven rapid changes in financing conditions and macro stability. In 2024–2025, fiscal consolidation and disinflation improved perceptions, but credibility remains sensitive to political support, external conditions, and the durability of policy execution.

EMBI — Sovereign Risk Premium

EMBI spreads declined meaningfully from the most stressed levels of the recent period, reflecting improved expectations around policy orientation and reduced near-term tail risks. However, the profile remains volatile: episodes of repricing suggest that markets continue to demand a sizable risk premium and remain highly responsive to fiscal news, political developments, and external risk appetite.

Primary Surplus — Fiscal Discipline

The primary balance has improved materially, representing a significant shift in fiscal stance. From a macro perspective, a sustained primary surplus reduces the need for monetary financing, supports disinflation, and strengthens debt dynamics. The key question is not only the size of the adjustment, but its durability under political and social constraints.

Gross Debt (USD) — Stock and Vulnerability

Gross public debt in USD remains elevated, implying structural vulnerability even as fiscal flows improve. Fiscal consolidation helps stabilize the trajectory, but the debt stock constrains policy flexibility and keeps refinancing risk relevant. The interaction between debt levels, market access, and the external constraint continues to shape the country risk premium.

Government Confidence (ICG) — Political Capital

The Government Confidence Index (ICG) provides a direct signal of political capital and social tolerance for the stabilization strategy. Confidence has shown meaningful swings, implying that support is present but conditional. In practice, credibility depends not only on technical coherence, but on the ability to sustain policies through the political cycle.

Interpretation — Credibility as a System

Fiscal improvement supports disinflation and strengthens the macro narrative, which in turn tends to compress sovereign spreads. However, elevated debt levels and a binding external constraint limit the pace at which risk premia can normalize. Political confidence acts as a transmission channel: when confidence weakens, markets often reprice quickly. As a result, credibility should be viewed as a system that can improve gradually but deteriorate abruptly.