The OECD has downgraded its 2026 growth forecast for Argentina from 4.3% to 3%, tempering expectations for President Javier Milei's economic recovery even as the country posted solid near-term expansion data.

The Paris-based organisation projects Argentina will close 2025 with 4.2% GDP growth—recovering from a 1.9% contraction in 2024—before moderating to 3% in 2026 and accelerating to 3.9% in 2027. The revisions mark a significant adjustment from September forecasts, which anticipated 4.5% growth in 2025 and 4.3% in 2026.

In its report, the OECD attributed future expansion to investment and exports, driven by "an increasingly favourable environment for businesses, less burdensome regulations and a dynamic energy and mining sector." However, the organisation noted that after three quarters of solid growth, real GDP declined 0.1% on a quarterly basis in Q2 2025, pulled down by a 0.7% drop in domestic demand.

Inflation projections moved in the opposite direction. The OECD now forecasts consumer prices rising 41.7% in 2025—up from its September estimate of 39.8%—before cooling to 17.6% in 2026, still above the previously projected 16.5%. Monthly inflation in Argentina rose 2.3% in October, although annual inflation fell to 31.3%, its lowest level since July 2018.

The OECD forecasts a current account deficit of 1.7% of GDP for this year - up from a surplus of 0.8% of GDP in 2024 - and a negative balance of 1% of GDP for 2026. Still, Argentina will be hoping that this deficit will be overturned, with the government achieving a fiscal surplus of 1.4% in October to provide some optimism.

The diverging forecasts underscore uncertainties surrounding the timeline of Milei's bold economic revamp, with growth momentum slowing even as fiscal discipline produces results. 

Milei's ruling La Libertad Avanza party scored a decisive victory at the midterm legislative elections in October, where it captured 41% of congressional votes, propelled by the Trump administration's unprecedented $20bn currency swap line to Argentina. Milei has utilised a small portion of the facility to stabilise the peso during recent volatility, while inflation and GDP growth appear to suggest that the libertarian government’s economic agenda is gradually yielding positive results.

And despite persistent economic pessimism, sentiment indicators are shifting. According to an AtlasIntel/Bloomberg survey, 64% of respondents now view the economy as "bad," down from 68% in October, whilst those expecting further deterioration over the next six months declined to 44% from 53%. 41% now anticipate economic improvement, a seven-point increase.

Argentina's GDP expanded 5% y/y and 0.5% m/m in September, suggesting Milei's flagship austerity measures may be gaining traction without collapsing domestic demand.