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“Second phase of Milei’s transformation.” This is how UBS titled its latest report on Argentina 2026. The company, one of the most important in the world, devoted a comprehensive analysis to the country, from the political to the economic. “The combination of greater political stability and external support offers Argentina a window to deepen its reform agenda in 2026,” UBS said.
The bank says Argentina will enter 2026 with a government that has new political capital and international support. “After several months marked by allegations of corruption and questions about the ability to govern, President Javier Milei closes 2025 with a decisive victory in the midterm elections, an improvement in relations with the United States and a more stable macropolitical outlook,” he says.
According to the Swiss bank, there will be a second phase of Milei’s government next year “aimed at transforming Argentina’s economy” and focusing on improving governance, promoting structural reforms and rebuilding international reserves.
“It is likely that structural reforms – including tax, labor and general deregulation – will move forward in 2026, even if they do so in a watered-down version, supported by a more cooperative style of government,” he points out.
And remember, external stability is anchored in US support and liability management activities, while remonetization and growth recovery will contribute to reserve accumulation. “Together we hope that Argentina’s economic fundamentals will continue to improve in 2026,” he says.
Regarding reserves, UBS explains that “there is a broad consensus among investors that Argentina also needs to build reserves from very low levels,” considering that the country faces external obligations of around $48 billion by 2027.
Luis Caputo plans to achieve this through a remonetization strategy. The monetary base is at an exceptionally low level and as nominal GDP recovers, demand for pesos is expected to increase. This gives the central bank leeway to buy dollars without creating inflationary pressures. “Additional foreign exchange is expected to flow in from corporate and provincial issuances, greater foreign direct investment and a more robust agricultural harvest from Q2 2026,” the company warns.
“For now, the government intends to maintain the exchange rate fluctuation bands. Officials consider them an important anchor in a bimonetary economy where expectations can change abruptly. Although a fully floating exchange rate system remains the long-term goal, the authorities believe that moving too soon could have a destabilizing effect. We believe that some devaluation would contribute to competitiveness, but this is no longer as urgent after registering an adjustment of almost 25% at the end of 2025,” says UBS.
risk
And he says the biggest near-term risk is that the peso reaches the upper limit of the fluctuation band, which would likely force the central bank to intervene and could slow reserve building.
In terms of activity, UBS claims the economy grew about 6% year-on-year at the start of 2025, but the consensus is for a slowdown towards 2% at the start of next year before accelerating back to 4% at the end of 2026.
The UBS report leaves other definitions:
– “Business access to global markets should boost investment, particularly in energy, mining and agriculture, three sectors that remain structurally strong and are increasingly central to Argentina’s export profile.”
– “Together we hope that Argentina’s economic fundamentals will continue to improve in 2026.”
– “Argentina faces a difficult external debt maturity profile in 2026, with obligations worth $17.8 billion ($8.4 billion in bonds, $4.3 billion to the Secretary of State, $4.2 billion to multilateral organizations and $900 million to local creditors).”
– “The early signs of Milei’s re-election prospects in 2027 also appear to be favorable. The Peronist opposition is fragmented and lacks a unifying figure; and if the economy continues on a path of growth and inflation, Milei will enter the next electoral cycle from a strong position.”
– “His agenda – fiscal discipline, deregulation and pro-market reforms – is increasingly influencing political debate, even among some Peronist leaders at home.”
– “Lower post-election interest rates are already boosting consumption, while relatively stable inflation is supporting real incomes.”
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