Argentina's Export Boom Masks Domestic Credit Crisis and Rising Inflation
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Argentina is navigating a week of sharp contrasts: reserve accumulation and major investments at the peak of the export-led model, while consumer credit contracts, delinquency hits record highs, and vast swaths of the domestic economy clamor for fiscal relief and a lifeline to stay afloat.
The Central Bank closed the week having surpassed USD 10.184 billion in foreign currency purchases since January, meeting the annual target agreed with the International Monetary Fund seven months ahead of schedule. The monetary authority strung together more than 100 consecutive trading sessions with a buying balance, and Minister Luis Caputo confirmed before the Instituto Argentino de Ejecutivos de Finanzas that all debt maturities through the end of Javier Milei's term are covered. The IMF, for its part, expressed confidence that the government will be able to advance tax and pension reforms before 2027, according to spokesperson Julie Kozack in Washington. Gross reserves, however, slipped below USD 48 billion at Friday's close, pressured by gold's decline and payments to multilateral organizations, illustrating the persistent gap between the volume of purchases and the effective accumulation of net reserves.
On the FX front, the wholesale dollar closed the week at $1,440.50, accumulating a $30 increase over five sessions, while the Banco Nación dollar finished at $1,460 on the sell side and the blue at $1,435. The BCRA's Market Expectations Survey projects an exchange rate of $1,658 for December and accumulated inflation of 30.5% for 2026, well above the 10.1% forecast in the Budget. Analyst consensus anticipates that prices will continue running ahead of the dollar, deepening the debate over the exchange rate lag that some economists now consider structural.
Markets reflected external volatility. The S&P Merval shed 2.6% on the week in peso terms, with the dollar-denominated drop reaching 4.7%. Friday proved particularly brutal: Wall Street tumbled after a May employment figure that vastly exceeded expectations —172,000 new non-farm payrolls versus 88,000 forecast, according to Balanz Research— fueling fears that the Fed will keep rates higher for longer. The Nasdaq lost 4.1% in that single session. Argentine ADRs took the hit: Satellogic fell 23.9% on the week, Telecom 11.3%, Globant 7.9%. Country risk, which had touched a low of 486 basis points on Thursday —near the lowest reading of the Milei era— rebounded Friday to 499 points. Economist Ricardo Arriazu, one of the voices most closely heeded by the government, surprised attendees at KPMG's Tax & Legal Leadership Summit by revealing that the trailing twelve-month trade surplus already exceeds his most optimistic projections: "I had a surplus of USD 13.5 billion for this year. Now I'm at USD 20 billion with a current account surplus."
That flow of foreign currency has a clear engine in the energy sector. CompañÃa Mega, controlled by YPF, Petrobras and Dow, inaugurated in BahÃa Blanca a new natural gas liquids fractionation train with an investment of USD 260 million, the first phase of a USD 650 million program running through 2028, which will expand its processing capacity by up to 50%. The government also approved new projects under the Régimen de Incentivo para Grandes Inversiones: the San MatÃas gas pipeline for USD 1.3 billion and the second phase of the Sal de Oro lithium project for USD 208 million, bringing the number of accepted initiatives to 18. The preliminary award of the HidrovÃa to the Belgian-Argentine consortium Jan De Nul–Servimagnus, which promises a 13.5% reduction in logistics costs for 80% of Argentine foreign trade, adds another milestone to a week of structural infrastructure decisions. In parallel, the sale of Shell's 894 service stations in Argentina to Swiss fund Mercuria Energy Group for USD 1.42 billion was confirmed, with participation from José Luis Manzano's group.
The flip side of that virtuous cycle in exports and major investments is a domestic economy that cannot find traction. Peso-denominated credit to the private sector fell for a second consecutive month in real terms, according to consultancy Equilibra, dragged down by tightening lending criteria in the face of stubbornly high delinquency. Mortgage financing collapsed 62% year-on-year in May, to just USD 116 million disbursed nationwide —roughly 1,500 transactions— its lowest level in two years, according to consultancy Empiria. Credit card usage posted its fifth consecutive monthly decline in real terms. Among non-financial credit providers —appliance retailers, retail chains, fintechs— delinquency reached 26.9% of the portfolio in February, with the appliance segment exceeding 44% in non-performing loans, according to BCRA data.
The textile industry, operating at 40% of capacity and accumulating a 27.1% decline in the first quarter, concentrates one out of every three industrial jobs lost. Harvester manufacturer Vassalli is negotiating its symbolic transfer for one dollar. Pirelli will halt its Merlo plant for a week. A textile entrepreneur in Córdoba went viral with a video addressed directly to the President: "We need a lifeline. We're in trouble." The Confederación Argentina de la Mediana Empresa asked Caputo for a temporary suspension of embargoes and a tax moratorium. The CGT openly clashed with the Unión Industrial Argentina at the ILO conference in Geneva, branding as "opportunists" those celebrating the new labor law.
What lies ahead will bring several simultaneous decisions. In less than twenty days, MSCI will publish its annual market classification review: if Argentina advances from standalone status, JP Morgan estimates that at least USD 2.3 billion in institutional capital could flow in. The government will need to publish the decree lowering export duties on wheat and barley —delayed beyond the June 1 deadline promised— while meatpackers press Caputo for a reduction in export duties on beef. May inflation, which the market projects at 2.3%, will be released mid-month, and will be the first reading allowing calibration of whether the downward trajectory —with inflation breaking below 2% monthly in August per consensus— is holding. With the World Cup about to begin and the 2027 electoral calendar approaching, the economic team is pressing ahead with building that "financial cushion" which, according to government sources, is seen as indispensable to prevent politics from destabilizing what the macro is beginning to construct.