Argentina's Export Boom Masks Deepening Domestic Collapse

The IMF technical mission that landed in Buenos Aires this Monday arrives at a moment when the government has more to show than in previous reviews, but also more to explain. The Fund's staff, led by Joyce Wong in her formal debut as head of the Argentine case, will encounter a primary surplus that had already reached around 1.1% of GDP by the end of August — enough to make up part of the ground lost in June, when the failure to meet the 0.7% half-year target put the economic team on the defensive — yet still short of the 1.4% pledged for December. Minister Luis Caputo will travel that same week to New York alongside President Javier Milei to attend the UN General Assembly, meaning the Fund's technical staff will have to advance much of the negotiation with the rest of the economic team, while on Friday, September 25, a principal payment of roughly $800 million to the Fund itself comes due.

The review lands at a moment when the Argentine economy displays a structural dichotomy that is increasingly hard to ignore. The second quarter showed a 0.6% GDP contraction versus the first, with private consumption falling 2.4% and both investment and public consumption also declining, while exports of goods and services grew 2.5% in real terms over the same period. That divergence — a soaring export sector and a shrinking domestic market — is not a quarterly anomaly but the clearest expression of the Milei model's deliberate architecture. The wholesale dollar closed last week at $1,514.50, an all-time nominal high, but with significant real appreciation: in 2026 the currency has risen just 3.8% while consumer inflation has accumulated close to 22%. Barclays analysts have noted that the real effective exchange rate "is too strong for the current policy mix," braking activity in non-primary sectors. Citibank, by contrast, published a report this week arguing that the market is overstating the risks stemming from the 2027 elections and that macroeconomic fundamentals have not deteriorated enough to justify greater caution.

External trade data support the tailwind thesis: in August, exports totaled $8.883 billion, up 12.4% year-on-year, driven by 16% higher prices and leaving a monthly trade surplus of $2.187 billion. In the first eight months of the year, the accumulated balance reaches $18.249 billion, with exports up 21.4% year-on-year and imports down 2.6%. Fisheries exports totaled $1.677 billion between January and August, 23.4% more than in the same period of 2025. And on the energy front, YPF confirmed at the GasTech fair in Bangkok that it is close to signing its first LNG export contracts, while Transportadora de Gas del Norte announced the construction of the Manuel Belgrano pipeline, a $1.5 billion investment that will connect Vaca Muerta to the country's center and north, with export potential to neighboring countries. The geopolitical context acts as an accelerant: Houthi attacks in the Persian Gulf, two QatarEnergy liquefaction trains out of service, and market sentiment shifting from expecting a return to normal toward fearing a prolonged disruption of LNG supply.

But the domestic face of the model presents tensions the government has been unable to resolve. Bank delinquencies on household loans reached 12.9% in July, the highest level in more than twenty years and more than double the reading of a year ago. According to a Zentrix survey, 76% of Argentines who took on debt did so to pay for food, health, utilities, and services. Four out of every ten workers supplement their income with odd jobs or a second job. Labor informality climbed to 45% of the employed, the highest level in the historical series, and those who migrate from formal employment to informal self-employment suffer a drop of nearly 30% in real income. Unemployment rose to 7.9% in the second quarter, with Greater Rosario at 11.5% and Greater Córdoba at 10.5%. Peso credit to the private sector fell 1% in real terms in August; the government launched a program of up to 2 trillion pesos to fund mortgage loans, but high rates and record delinquency make traction difficult. The BCRA cut its FX purchases to a pace of just $14.5 million per day in September, well below prior months, as part of the strategy of using the exchange rate as an anti-inflation anchor.

September inflation is generating noise. After August's 1.7% — the lowest reading in 14 months, which the government celebrated as a victory — high-frequency measurements from consultancies such as Analytica and LCG show food and beverages averaging monthly gains of 2.7%, which would push headline CPI toward the 2% threshold. Disinflation, in other words, is not consolidated. The 2027 Budget implicitly acknowledges this lag: the inflation path projected in the document submitted to Congress contemplates 29% for the end of 2026 and 18% for 2027, pushing the single-digit target back to 2029, two years later than envisioned just a year ago. Growth is projected at 4%, a figure that economists such as Daniel Artana of FIEL consider "optimistic," while the REM points closer to 20% for 2027 inflation.

The Senate this week approved the so-called Fiscal Innocence II, an initiative that seeks to provide legal guarantees to taxpayers who declare previously undisclosed funds — the government estimates there are $170 billion outside the system — although tax specialists warn that repatriation flows will not be immediate. Simultaneously, the Argentine Industrial Union endorsed the RIGI Business Rounds, a mechanism to link large investments under the special regime with domestic suppliers, in an industrial sector that has accumulated a 2.6% decline year-to-date. Poultry producer Granja Tres Arroyos filed for reorganization for its entire corporate group, with debt that at the end of 2025 amounted to 536 billion pesos. SanCor, meanwhile, saw the Rafaela court authorize the reopening of the tender to sell its six plants and brands, after more than two months of judicial paralysis.

For the coming weeks, the focuses will be multiple. The third IMF review will determine whether there is a waiver on the missed half-year fiscal target and whether the government can access an additional disbursement of around $869 million. Argentina Week in Paris, scheduled from September 30 to October 2 with Milei, fourteen governors, and business leaders, will seek to translate the investment climate into concrete commitments. The 2027 Budget will begin debate in October in Congress, where the disability issue — which Córdoba governor Martín Llaryora publicly rejected — has already generated tensions with legislative allies. And consultancy Invecq warns that two variables will be decisive for the FX front in 2027: settlements of corporate bonds and private-sector loans, which have lost momentum noticeably, and dollar demand from companies in a year that will combine massive maturities and presidential elections.