After the legislative elections, it will be imperative to rebuild currency reserves, since it is expected that the decrease in reserves will continue until October, without having any help before that time.
The Argentine economy enters a slippery terrain. The deterioration of the trade balance, the fall of the activity and the absence of accumulation of reserves compromise the maneuvering capacity of the economic team. Despite the official efforts to exhibit international support, reality shows a more fragile table: public spending presses, external debt commitments intensify and Financing through US treasure emerges as a last moment resource more than as a long -term strategy.
In this scenario, the savers in pesos and dollars They observe with restlessness How the exchange rate will become the inevitable adjustment variable. The real economy stagnates and monetary policy is trapped between the electoral urgency and the distrust of the markets. The question that floats is whether the stability margin of an announcement is enough to contain expectations, or if in the remainder of the year we head towards a storm that will impact on the pocket of those who try to protect their savings.
The Minister of Economy, finally revealed, in which the government had been working during the last two or three months to “Ensure the payment of bond maturities in January”. The idea is to guarantee July payments of next year also. It is likely that then, the persistent political risk premium demands devalue, a more competitive real exchange rate is needed in the next quarters, even if the electoral panorama is favorable for President Milei.
After the legislative elections, it will be imperative to rebuild currency reserves, since it is expected that the decrease in reserves will continue until October, without having any help before that time.
In fiscal matters, according to budget data, the total expenditure of the national public sector would reach 15.3% of GDP and income 15.6%, excluding public intra-select income, which represents a 0.2% increase compared to 2025. The budget thus provides for a primary fiscal surplus of 1.5% of the GDP in 2025 and 2026. This represents 0.1% less than foreseen in the IMF program for the IMF for the IMF program for the IMF program for the IMF program 2025. But, the primary surplus for next year is 0.7% lower than expected in the review of the August IMF program. The highest expense has an impact on a lower primary surplus, although, in principle it is sufficient to finance interest payments, excluding the public intra-selector interests, estimated at 1.2% of GDP. Total interest payments, excluding the service of zero rate bonds, are 2.2% of GDP. Economic activity is strongly affected.
The national accounts of the second quarter of 2025 reveal a worrying situation, the economic activity has stagnated. GDP decreased annualized 0.2%, which reverses the annual 3.5% rise in the first quarter. This is the first negative fact of real activity since the second quarter of 2024, which places the economy on the path of a technical recession.
Demand analysis reveals growing pressures. Private consumption, domestic demand engine, fell 4.4% per year after strong intertrrimestral growth. Despite this setback. Fixed investment also lost impulse, with a 2% annual drop after a 41% growth in the first quarter (obvious that it was in front of a lousy quarter). In the external field, both exports and imports decreased, with 8.5% falls and 12.6% annualized, respectively.
Since the political risk remains high and uncertainty will probably persist until October, the economic recession will not show signals of improvement. Waiting for the publication of the July economic activity data, we foresee that the GDP contracts 5% in the third quarter.
The immediate horizon does not offer certainties, but warnings. The combination of fiscal imbalances, exchange pressures, falling foreign trade and external financing dependence configures a high vulnerability table. Until dollars enter, the lack of accumulation of genuine reserves deprives the central bank of the “insurance” essential to face shocks, while political volatility amplifies risks. The next months of 2025 are emerging as a mined field for the economic team; Any calculation error could precipitate a new episode of exchange and financial instability. Consequently, both institutional investors and small savers must assume that the real challenge is not the current photo of the surplus, but the full film of an economic model that walks to the edge of the recession and external fragility. The anguish, more than a hypothesis, could become the dominant mood of the market.
Doctor of Political Science, Master in International Economic Policy, Director of Do.com.ar, Canal Youtube: @Drpabbab
Source: Ambito
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