Argentina’s 2027 Budget Sets Growth, Inflation and Peso Targets

Argentina submitted its 2027 budget bill to Congress on September 15, meeting the constitutional deadline. This budget marked a departure from previous drafts, as it included comprehensive economic projections. The government had previously avoided publishing inflation or exchange rate forecasts. However, those figures are now publicly available, setting the stage for a year of political tension surrounding the budget.

The government anticipates a 4% economic growth rate for 2027, representing an increase from the projected 2-3% growth this year. Inflation is projected at an average of 21.1% annually, with a potential point-to-point rate near 18% by year-end, indicating a slowdown later in the year. Independent economists surveyed by the Central Bank generally predict higher inflation than the official estimates.

The budget also forecasts the Argentine peso will average ARS 1,728 to the dollar throughout 2027, with the rate potentially climbing to around ARS 1,847.6 by December. This projection shows gradual depreciation rather than a sudden drop. Average wages are expected to rise by 25.4% over the same period. The government hopes that rising wages will offset inflation's impact on households.

The budget emphasizes trade as a key driver, projecting exports exceeding US$130 billion and a trade surplus above US$15 billion. Private consumption is expected to grow by 3.4%, while investment is projected to increase by 9.2%. Export volumes are forecast to grow by 8.5%, with imports rising by 8.2%. Economy Minister Luis Caputo highlighted Argentina's fourth consecutive fiscal surplus, marking a first in the country's history outside of a debt default.

The budget aims to maintain this positive fiscal outlook, which is crucial for the government's appeal to Congress and international investors. Formal debate on the bill is set to commence on October 5, providing lawmakers with about three months to negotiate before the year's end. The budget discussions coincide with a separate dispute over scrapping Argentina's PASO primaries, both of which are vying for limited floor time and support from provincial governors who are essential for the bill's passage.

The government faces the challenge of justifying any discrepancies in its economic assumptions, as missing forecasts could undermine its credibility with markets. The published budget assumptions serve as the benchmark against which the government's performance will be evaluated throughout the year.