The OECD projects a 5.7% GDP growth for Argentina in 2025, suggesting substantial economic recovery. However, inflation is expected to remain high at 28.4%. Key drivers include government reforms, reduced inflation rates, and growth in key sectors, but challenges like currency stabilization and fiscal responsibility remain crucial for sustaining growth.
The Organisation for Economic Co-operation and Development (OECD) has forecasted an impressive 5.7% GDP growth for Argentina in 2025, marking a significant recovery from prior economic contractions. This positive outlook contrasts with the ongoing inflation issue, anticipated to remain at 28.4%. Furthermore, both the International Monetary Fund (IMF) and World Bank estimate the GDP growth at approximately 5% for the same year.
Argentina’s Central Bank recently released the Market Expectations Survey. It indicates convincing evidence of economic recovery, projecting a 23.3% inflation rate along with a 4.8% growth in GDP for 2025. Key factors contributing to this growth include the economic reforms instituted by President Javier Milei’s administration, fiscal adjustments, and enhanced performance in crucial sectors such as energy, mining, and agriculture.
Another critical aspect is the tax amnesty plan initiated in August 2024, which has successfully generated over $22 billion in new financial flows. Concurrently, there has been an observable rise in real wages, stemming from decreases in inflation, which have positively influenced consumer spending.
However, the anticipated growth follows a challenging period, with an estimated 2.8% contraction in 2024. Stabilizing the currency remains a pivotal challenge, with predictions suggesting a nominal exchange rate of 1,175 pesos per dollar by December 2025. It is crucial for Argentina’s government to maintain fiscal responsibility and pursue ongoing economic reforms to foster sustained recovery and attract foreign direct investments.
To aid this recovery, the Incentive Regime for Large Investments (RIGI), introduced in July 2024, provides substantial tax and regulatory incentives for investments exceeding $200 million across sectors like energy, mining, and technology. This initiative aims to create a stable regulatory landscape that encourages both local and foreign investments over a period of up to 30 years. Additionally, President Javier Milei’s administration recently achieved a notable milestone by executing a significant debt repayment of US$4.341 billion to international bondholders, reinforcing investor confidence in Argentina’s economic landscape.
In summary, the OECD’s projection of a 5.7% GDP growth for Argentina in 2025 illustrates a strong economic recovery after prior contractions. Key factors like fiscal reforms, a falling inflation rate, and significant investments are pivotal to this growth. However, ongoing challenges such as currency stabilization require careful management to ensure that the recovery is sustained and attracts foreign investments, particularly through initiatives like the Incentive Regime for Large Investments.
Original Source: eurasiabusinessnews.com
