Argentina should maintain reform momentum to boost investment and productivity

By Estudio Chaloupka

Argentina’s economy is set for a strong recovery as its ambitious reform programme starts to pay off. Maintaining the reform momentum will be key to restore confidence, and boost investment and productivity, according to a new OECD report.

The latest OECD Economic Survey of Argentina projects GDP to grow by 5.2% in 2025 and 4.3% in 2026, following contractions in both 2023 and 2024. The removal of most currency and capital controls in April 2025 will support further improvements in economic sentiment and investment. Inflation will continue to decline to 37% in 2025 and 15% in 2026.

"Argentina has achieved an unprecedented fiscal consolidation, but fiscal policy will require further fine-tuning to maintain fiscal prudence in the medium to long term while boosting potential growth," OECD Director of Country Studies Luiz de Mello said, presenting the Survey in Buenos Aires alongside Argentina’s Secretary of Finance Pablo Quirno. "This will require a continuous phasing-out of subsidies and improvements in public-sector efficiency, while replacing distortionary taxes with broader income and consumption tax bases."

Recent reforms have improved the business environment, but further progress would help boost productivity growth, which declined over the past decade. Infrastructure bottlenecks, a complex tax system and slow judicial procedures have added to costs, curtailing competitiveness. Better regulations and lower trade barriers will strengthen competitive pressures and incentives for firms to operate more efficiently.

Enhancing the flexibility of labour market regulations and lowering social security contributions for employees with low incomes would help bring more workers into the formal economy and promote opportunities. Reforming the pension system would also help strengthen incentives for formal job creation. A pension system that combines a tax-financed universal basic pension with a contributory pillar for those with higher incomes could deliver adequate pension benefit levels while minimising disincentives for formal job creation.

Argentina has significant potential for renewable energy generation from solar and wind power, as well as the world’s third largest reserves of lithium. Promoting renewable energy sources and developing the lithium industry will require improvements in support infrastructure and an appropriate management of water resources. Stronger competition in the generation, transmission and distribution segments of electricity markets would help ensure that retail prices reflect costs and support the development of Argentina’s competitive edge in renewables.