I Explained to a friend from Buenos Aires why I now believe in the argentine economy

I, like many Brazilians, am considering moving to Argentina, and we’ve already started investing in the ETF with the ticker ARGT. This fund is, essentially, a way to buy shares in a group of Argentine companies using dollars. In other words, we’re not negotiating with the IMF: we’re bringing dollars into the country every 15 days. It’s crucial to understand that, in a healthy economy, it’s not the central bank that pays the debts—it’s the flow of dollars coming into the country. Those dollars need to be exchanged with us, the investors, and then the government can use them to meet its obligations. The central bank doesn’t even need to buy reserves. There’s no need to worry if it stops accumulating dollars: they’ll keep coming in by the millions through the pockets of Brazilians, Americans, Chileans, and people who believe in free trade and know how to do the math.

Here’s the thing: a country capitalizes with dollars when it manages to create a steady flow of foreign currency coming in from abroad. Those dollars can come through various channels: exports, foreign investments, inbound tourism, remittances, or even from Argentines and foreigners who decide to save or start businesses in the country.

Key reasons:

1. Export potential remains intact: Argentina has strategic resources the world needs—food, energy (like Vaca Muerta gas), lithium, and more. If the country achieves stable conditions, exports could skyrocket.

2. Asset appreciation: Right now, many Argentine companies are undervalued. International investors (like me and many Brazilians) are buying ETFs like ARGT because we believe that if the macroeconomy stabilizes, these assets will increase significantly in value. That means an inflow of financial dollars.

3. Tourism and regional migration: With a competitive exchange rate, Argentina can attract tourists and even people from other countries who want to live, study, or invest there. Each of them brings dollars into the country, even if they don’t go through the Central Bank.

4. Shift in expectations: When a country starts generating confidence, dollars stop leaving and start coming in. This is reflected in the demand for bonds, stocks, and even property purchases by foreigners.

And something very important: in an economically healthy country, it’s not the Central Bank that pays the debts—it’s the market. In other words, dollars that come in through legitimate channels are exchanged in the market, and the government can use those funds to settle commitments without issuing or burning reserves. That’s why we shouldn’t obsess over the Central Bank accumulating reserves in the short term. If confidence returns, dollars will come in anyway, through millions of private decisions—from Brazilians, Chileans, Americans, or even Argentines bringing their savings back from abroad—because they see real opportunities.

In short, Argentina has what it takes. What’s needed is a framework of predictability, clear rules, and signs of stability so that those dollars not only come in but stay and contribute to the country’s development.

What are the signs of improvement in the Argentine economy?

The Argentine economy still faces significant challenges, but in recent months, some signs of recovery have emerged, which economists, analysts, and investors are starting to highlight, especially since the beginning of Javier Milei’s administration. Below, I share the main indicators and facts interpreted as signs of stabilization or economic improvement:

1. Primary fiscal surplus:  

   • For the first time in over a decade, the national government recorded a primary fiscal surplus in the first months of 2024 and 2025.

   • This means the state is collecting more than it spends (excluding debt interest payments).

   • It’s a sign of fiscal discipline that boosts market confidence.

2. Strengthening of international reserves:  

   • Although the Central Bank isn’t yet accumulating large volumes of dollars, net reserves have stopped falling and show signs of stabilization.

   • The inflow of foreign currency from exports and financial instruments is gradually helping to rebuild the reserve buffer.

3. Exchange rate stabilization:  

   • The "blue" dollar and financial exchange rates have remained relatively stable in recent months, after years of high volatility.

   • This suggests less pressure on the Argentine peso and more controlled expectations of devaluation.

4. Slowdown in monthly inflation:  

   • Monthly inflation, which exceeded 20% in December 2023, has shown a steady slowdown throughout 2024 and 2025.

   • Although the rate is still high, the downward trend indicates that monetary and fiscal tightening policies are starting to bear fruit.

5. Interest from foreign investors:  

   • International funds have started looking at Argentine assets (stocks and sovereign bonds) with renewed interest.

   • The ARGT ETF, for example, has seen recent appreciation, reflecting a bet on the recovery of the real economy and the corporate sector.

6. Improved trade balance:  

   • Exports of products like soybeans, corn, beef, and energy (Vaca Muerta gas and oil) remain strong.

   • With more controlled imports, the country is generating trade surpluses, which facilitates a net inflow of dollars.

7. Deregulation and economic reforms:  

   • Milei’s government has pushed a series of liberalizing reforms: removing price controls, opening markets, and simplifying regulations.

   • While they spark debate, these measures have been well-received by business sectors and investors with a more liberal outlook.

8. Growth prospects in key sectors:  

   • Agriculture, lithium mining, and energy are emerging as medium-term growth drivers.

   • Global demand for these resources benefits Argentina if it can establish a predictable and competitive environment.

Caution is still necessary

Despite these encouraging signs, the Argentine economy:

• Still has high levels of poverty and informal employment.

• Faces a highly restricted credit market.

• Experiences significant political tensions, with resistance to reforms in Congress.

• Is dealing with a delicate social context due to fiscal adjustments.