Argentina’s economy at the end of 2025 presents a scenario of stark contrasts. While international headlines and reports from organizations like the IMF praise the sharp decline in inflation and the correction of fiscal imbalances, a significant portion of the population and productive sectors still feel the effects of an unprecedented economic adjustment. The apparent macroeconomic improvement coexists with a fragile social situation, drawing a paradox that defines the country’s present and near-term future.
From hyperinflation to stagflation
To understand the current situation, it’s necessary to recall the starting point. Argentina was coming out of a hyperinflationary spiral that decimated purchasing power and confidence. The government of Javier Milei implemented an austerity shock, heavily cutting public spending, which acted as a fiscal anchor to stabilize the currency and force prices down.
The macroeconomic results are undeniable. Monthly inflation has remained below 2% for consecutive months, with a projected annual rate of around 30% in 2025—dramatically lower than previous peaks of 287% year-on-year. However, this price cooling came at the cost of a deep recession. After a rebound in 2024, economic activity entered a stagflation phase in 2025. Consumption remains weak, and key employment sectors, such as construction and industry, are facing a severe crisis.
The dual face of social impact
Slow improvement in poverty indicators
After reaching alarming highs in 2024, poverty levels have begun to decline. Official data show poverty at 31.6% in the first half of 2025. This improvement is mainly attributed to controlling inflation in basic goods and targeting direct aid. Despite this progress, levels remain extremely high, especially among children, where it approaches 45%.
Uneven recovery
The main problem is that economic recovery is not uniform. While export-linked sectors, such as energy (oil and gas) and agriculture, project strong growth, the domestic market remains depressed. The social cost is evident in the loss of purchasing power among many retirees and in a labor market that, though expected to improve slightly, remains precarious for many.
U.S. strategic interest: lithium and geopolitics
The question of why the United States shows renewed interest in Argentina’s stability goes beyond pure economics. It rests on two pillars: strategic resources and regional power balance. In a world moving toward electrification, Argentina holds some of the largest lithium reserves on the planet. For Washington, securing a reliable supply of strategic minerals and reducing dependence on China is a priority. The Milei government has expressed clear alignment with the U.S., facilitating this geopolitical strategy to counter China’s influence in the region.
Mechanism of support: direct bailout or strategic influence?
Although media often simplify it as a “bailout,” the financial support mechanism is more complex than a simple direct loan. Aid flows through several channels, where the U.S. role is more that of a strategic facilitator:
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Political backing at the IMF: The main financing vehicle remains the program with the International Monetary Fund. Funds received by Argentina are IMF disbursements tied to fiscal targets. The U.S., as the largest shareholder, ensures approval of these reviews, providing essential political support to keep the funds flowing.
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Currency swap negotiation: A currency swap has been arranged between the Federal Reserve and the Central Bank of Argentina. This is not a loan for spending but a hedge to strengthen reserves and signal market confidence.
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Support in credit markets: The U.S. has also expressed willingness to support sovereign bond purchases, helping reduce country risk and facilitate Argentina’s return to international credit markets.
In short, the money has two main purposes: refinancing IMF debt maturities and replenishing central bank reserves to consolidate stability. It is not intended to finance public spending.
Navigating between macro promise and micro urgency
Argentina’s major challenge is transforming macroeconomic stability into tangible, widespread improvements in well-being. The success of the current model will depend on its ability to reactivate domestic consumption and production without reigniting inflationary pressures. The country sails through complex waters, between the promise of an orderly future and the urgency of a society demanding answers in the present.
Sources:
- BBVA Research: Situación Argentina. Junio 2025
- Chequeado: El día después de las Elecciones Buenos Aires 2025: cómo llegó el gobierno de Javier Milei según 10 indicadores sociales y económicos
- Infobae: Litio: una carta positiva de la Argentina en las negociaciones con Estados Unidos
- Banco Mundial: Argentina: panorama general
- El Tiempo: Lo que hay detrás de la caída económica que golpea a Argentina y los tres desafíos que deberá enfrentar Javier Milei
