MercoPress. South Atlantic News Agency

Goldman Sachs cuts Argentina's growth forecast to 2.7% and looks ahead to the elections

Despite the revision, the bank considered that the economy is “expanding at a moderate pace” and maintained a favorable assessment of several aspects of the economic program

Goldman Sachs lowered its growth forecast for Argentina's economy in 2026 from 3% to 2.7% and anticipated a possible contraction in activity during the second quarter, according to a report by the bank. The institution also said economic performance will increasingly be assessed against the presidential elections of October 2027.

The cut followed April and May indicators that came in below expectations. In the first quarter, gross domestic product had grown 0.7% on a seasonally adjusted basis, an improvement the report attributed to the statistical carryover from late 2025 and to March's performance, which offset weaker figures for January and February.

Despite the revision, the bank considered that the economy is “expanding at a moderate pace” and maintained a favorable assessment of several aspects of the economic program. It highlighted the commitment to fiscal balance, reserve accumulation, and an improving trade position: by its calculations, the central bank has bought close to $13 billion so far this year and net reserves have risen by around $6.6 billion. The 12-month trade surplus reached the equivalent of 3.2% of output, with the energy sector accounting for nearly half of the result.

The bank also praised the disinflation process. After the 1.9% recorded in June, it projected that prices will continue to decelerate in the second half and that the year will close near 29%. In its overall assessment it said the country remains “on the right track in terms of macroeconomic policy,” while warning that political and social challenges persist. “The margin for error is narrow,” it said, anticipating greater investor attention on Javier Milei's prospects for reelection.

Goldman Sachs's forecast sits below other recent estimates. Moody's projects growth of 3.4% for 2026 and 3.5% for 2027, while the International Monetary Fund estimates 3.5% this year and 4% next.

The report came days after Moody's raised Argentina's sovereign rating to B3 from Caa1, with a positive outlook, the third upgrade in under three months following those by Fitch and Standard & Poor's. It is the first time in a decade that the three main agencies have aligned their assessments. The central bank exceeded $10 billion in foreign-currency purchases in the first half, meeting the target agreed with the multilateral lender.

Country risk, meanwhile, closed the week at 437 basis points after rising 4.3%, with a session high of 445. IMF Managing Director Kristalina Georgieva is scheduled to visit the country next week.