The recent report of JP Morgan On the Argentine economic situation it reflects a latent concern for recent events, although with a tone that seeks to reassure investors and minimize the risks implicit in the current situation. However, by unlocking the underlying message, a series of alert signals that require a more critical and devoid of the veil of financial diplomacy are evident.
Financial diplomacy and their veiled messages
The research departments of the Investment banks are usually extremely cautious in their analysis and communications. The reason is simple: Any explicit alarm message could cause panic in the markets and unleash capital movements that, even favoring short sales strategies of their traders, do not always favor their institutional customers. In this sense, JP Morgan’s report on the Argentine situation is no exception. However, what distinguishes this last report from the previous ones is that, despite the efforts to maintain a moderate tone, to whom they understand the encrypted language, allows them to glimpse serious concerns within their analysis.
One of the central points of the report is that, it cannot hide the “Political noise” generated by the recent controversy around the “Meme currency” promoted in social networks by President Javier Milei. While the “Global Data Watch” of February 21, 2025 by JP Morgan acknowledges that both the Argentine and the Americans have initiated investigations, strive to highlight that Milei is “Apparently exempt from legal irregularities”. However, the simple fact that these investigations have opened indicates that the episode cannot be discarded as a minor event, especially in a context where investors confidence is crucial for macroeconomic stability.
The report also focuses on the relationship between market volatility and the presidential approval rate. Although it is mentioned that Milei’s popularity has decreased slightly 60% in January to 57%, this perspective contrasts with the deterioration observed in various daily surveys that we have the foundations and private studies in Argentina, which show a much more descending tendency pronounced, above all, in the last 4 days after the JP Morgan report. This data is relevant, since market confidence is usually tied to political stability and citizen support of the economic measures implemented.
In macroeconomic terms, JP Morgan underlines the commitment to fiscal restriction as an cornerstone of economic stabilization. However, the data presented reveal fissures in this approach. While the primary balance registered a surplus of US $ 2.3 billion in January, this figure must be nuanced, since the capitalization of interest is not included that, instead of being paid, become additional debt (remember: during 2024 Public debt records an increase US $ 94,000 million, according to the Secretary of Finance). In addition, the report emphasizes that it is the first time since 2011 that two consecutive months of primary fiscal surplus are presented, although omits that January is an atypical month in terms of income and expenses, which relativizes the relevance of this information.
Another aspect to consider is the dynamics of fiscal income. Although JP Morgan mentions a 22% increase in income related to economic activity, it also recognizes a 42.5% drop in taxes linked to foreign trade. This reduction in collection could generate a significant fiscal unbalance in the medium term, despite the official discourse on the sustainability of the adjustment.
Regarding spending, the report indicates a real annual increase of 13.6% in January, promoted by social transfers and public consumption. Although the sequential tendency of primary spending remains in negative territory (-5% quarterly), JP Morgan He warns subtle that fiscal consolidation will depend on an increase in incomegiven the limited margin that Milei-Caputo-Sturzenegger have to continue adjusting the expense. In this sense, states that the elimination of the country tax and The lack of extraordinary income from the income tax could represent a fiscal loss of approximately 2% of GDPwhich could compromise the sustainability of the adjustment.
The report concludes with the expectation that the administration will maintain a small general surplus, although its real magnitude It will depend on the new program with the IMF currently in negotiation. This point suggests that The current economic strategy is subject to the availability of external financing and that the margin of fiscal maneuver could be reduced if the expected growth objectives are not achieved.
Recommendation: Read between the lines, not with the eyes closed
In short, the JP Morgan report, although it tries to project an image of stability and control of the Argentine economic situation, suggests a series of latent risks that could materialize in the coming months. Political volatility, the fragility of fiscal collection and external financing agency configure a scenario where the optimism expressed by the entity must be contrasted with a deeper analysis of the country’s economic reality.
Beyond the numbers and declarations measured, corporations, savers and even the investor must develop a critical and skeptical reading of these reports. The diplomatic caution with which the data is presented is nothing other than a strategy to avoid premature alarms, but the experience indicates that, when An investment bank report suggests concern, it is because the situation deserves more attention than it appears. It is not just what is said, but about what is omitted, and that is where the key to understanding the true magnitude of the economic scenario that is coming.
Director of Esperanza Foundation. Postgraduate professor at UBA and private universities. Master in International Economic Policy, Doctor of Political Science, author of six books.
Source: Ambito
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