ARGENTINA: The Country’s 2025 Outlook & more – 9th Jan 2025

¡Buenos días from Greenway Parks! This is the Rorshok Argentina Update from the 9th of January twenty twenty-five. A quick summary of what's going down in Argentina.

It’s the start of a new year, which means consultancies are rolling out their forecasts for the next twelve years. Most are cautiously optimistic about the country’s economic outlook for twenty twenty-five, projecting GDP growth of up to 5%, a drop in inflation to around 23%, and a recovery in consumer spending. However, the exchange rate remains a major uncertainty. While some foresee a stable peso supported by stronger exports and renewed international confidence, others caution that vulnerabilities tied to current account deficits and limited foreign investment in pesos could pose risks.

For now, Argentina’s financial markets are on a roll, with the S&P Merval—the nation’s main stock market index—hitting a new dollar-denominated record and the country risk index dropping below 600 for the first time since twenty eighteen. Analysts attribute this surge to growing confidence in the government’s economic strategy, reinforced by timely bond payments. They’re also optimistic about further gains, predicting that the country risk index could dip below 400 points soon.

As to what the government’s plans are for twenty twenty-five, they include pushing ahead with privatizations, labor reforms, and changes to the pension system. In a recent interview, President Milei highlighted his administration’s continued push to downsize the state and cut regulations—efforts he says have already boosted Argentina’s standing in global economic freedom rankings.

The twenty twenty-five budget poses the most pressing challenge. Since Congress rejected the president’s proposal, he extended the twenty twenty-three budget for a second consecutive year—a move without precedent. This now grants Guillermo Francos, the Chief of Staff, the responsibility of adjusting allocations throughout the year, which could leave some sectors stuck with outdated budgets despite rising inflation.

In other news, one of this week’s biggest stories is the Secretariat of Human Rights shutting down the Haroldo Conti Cultural Center, located at the ex-ESMA memory site. The closure comes amid a broader wave of layoffs under the Milei administration, which dismissed over 400 workers in December.

The decision has drawn sharp criticism from human rights groups, who have held protests and accused the government of dismantling memory and justice policies linked to Argentina’s nineteen seventy-six-nineteen eighty-three dictatorship. On Saturday the 4th, activists organized an event titled A Memory That Burns, combining speeches and musical performances outside the Cultural Center.

Named after a writer disappeared during the dictatorship, the center’s closure has amplified concerns over the future of memory sites and human rights initiatives in the country.

Supermarkets are also concerned, though for different reasons. Sales have continued to drop in the final months of the year, falling nearly 18% compared to the same period last year. Data from the National Institute of Statistics and Census, or INDEC, shows that the decrease in sales at constant prices reflects the growing financial pressure on consumers, who are also grappling with rising debt levels.

Despite financial hardships, according to estimates by Martín González-Rozada, an economist and lecturer at Universidad Torcuato Di Tella, the country’s poverty rate dropped in the second half of twenty twenty-four, falling from a peak of 53% early in the year to around 37%. This improvement reflects lower inflation and modest wage recovery. However, experts warn that structural poverty and multidimensional issues, like access to basic services, continue to pose major challenges. The INDEC is expected to release official data in March.

On a related note, a recent study by the online job portal Bumeran found that nearly half of Argentina’s workers didn’t take any vacation over the past year. For 51% of them, the main reason was a lack of financial resources. 25% said they didn’t go on vacation because they changed jobs and 9% prioritized personal or professional goals. Among those who did take time off, the most popular destinations were the Atlantic coast of Buenos Aires in the east, Córdoba in the central region, and Patagonia in the south.

Interestingly, 55% of respondents said that extra vacation days would be a key factor when considering a new job.

Now, remember when the government scrapped the PAIS tax last month? That move caused the Central Bank to sell 800 million dollars in just three days, driven largely by demand from the auto sector. While officials described these sales as a temporary response to a specific situation, analysts warn that pressure on foreign currency demand could persist due to import needs and ongoing economic adjustments. Despite this, December saw overall reserve growth, though net reserves remain in deficit.

The automotive sector struggled in twenty twenty-four, but forecasts for twenty twenty-five are more optimistic, with production expected to reach around 600,000 units this year.

From the auto sector to the agro sector. Farmers are once again grappling with challenges from a dry spell as the La Niña weather pattern re-emerges this season. The continued lack of rainfall is raising concerns for key crops like soybeans and corn, which need water in the coming weeks to prevent significant yield losses. Prolonged dry conditions could hit crop production hard and pose challenges to President Milei’s economic recovery plans.

Now, in case you had forgotten, this is an election year. The midterms are set for the second half of the year, and Jorge Macri, the Buenos Aires City Mayor, has already announced that local elections will be held separately from the national ones. City residents will head to the polls in July to elect local legislators and again in October for congressional elections, a move that aims to give citizens a chance to focus on local issues.

Jorge Macri has also introduced a reform agenda that includes scrapping mandatory primaries, known as PASO, which he argues could save the country billions. While he says the decision is about prioritizing local concerns, the move could also carry political benefits by helping the center-right PRO party maintain its grip on the city.

The city government is also conducting a thorough review of the contents related to the Comprehensive Sexual Education, or ESI, program. This includes examining all materials like documents, images, videos, courses, and reading lists. In the meantime, these ESI materials will be taken offline during the school break. This move has sparked criticism, with some politicians defending the program as a vital tool for educators, while others accuse Mayor Jorge Macri of joining a broader campaign against the rights of children.

On that note about children, a landmark trial in the Córdoba province is addressing the deaths of five newborns and attacks on eight others at a neonatal hospital in twenty twenty-two. Nurse Brenda Agüero is accused of injecting potassium into the infants, while ten provincial health officials face charges of negligence and cover-ups. The case, involving over 200 witnesses, extensive forensic evidence, and civil lawsuits, marks a global precedent for holding institutional leaders accountable alongside medical staff.

Speaking of medical conditions, Jorge Lanata, the Argentine journalist known for reshaping media in the country, passed away on the 30th of December at sixty-four after a prolonged hospitalization. From founding the influential newspaper Página/12 in the nineteen eighties to his hard-hitting investigative TV show Journalism for All or Periodismo Para Todos, Lanata’s career spanned print, radio, and television, often sparking national debates.

Known for his sharp wit and critical perspective, he delved into topics ranging from human rights to corruption, earning numerous accolades and a polarizing reputation. Despite health struggles, including diabetes, kidney failure, and multiple hospitalizations, he remained a prominent voice in media until his passing.

To end on a more positive note, Kevin Lane, a British-Argentine archaeologist with CONICET, Argentina’s National Scientific and Technical Research Council, earned a prestigious UNESCO-ICOMOS Culture-Nature Prize for leading the restoration of two pre-Hispanic dams in Peru. The project provided fresh water access to 440 families while preserving historical heritage. Lane now hopes to replicate this initiative in other regions facing water stress, including parts of Argentina, despite challenges in funding and support.

Finally, the football superstar Lionel Messi has made history as the first Argentine and the first male footballer to receive the United States Presidential Medal of Freedom. The award celebrates his outstanding contributions on and off the field, including his role as a UNICEF Goodwill Ambassador and his work through the Messi Foundation and.

Aaand that’s it for this week! Thank you for joining us!

Thanks for sticking around for this episode of the Rorshok Argentina update! Thank you for your support, shares, and feedback. Got ideas, suggestions, or just want to say hi? Just drop us a line at info@rorshok.com.

Here’s to another year of keeping you on the loop with what's going down in Argentina. Happy twenty twenty-five!

¡Nos vemos la próxima semana!