Argentina’s economy is projected to expand by 2.8 percent in 2026, even in the face of a deteriorating global economic environment, as per a revised estimate from the Organisation for Economic Co-operation and Development. In its latest report – ‘Under Pressure’ – the Paris-based organisation cautions that the ongoing conflict in the Middle East is poised to hinder global growth and exacerbate inflation via increased energy and fertiliser expenses. Consequently, the OECD has revised its global growth projections downward, indicating that the economic ramifications of the conflict involving the United States, Israel, and Iran will persist long after any potential ceasefire. The OECD now anticipates a deceleration in global growth from 3.4 percent in 2025 to 2.8 percent in 2026, assuming that disruptions remain contained. A more prolonged conflict could reduce growth to as low as 2.1 percent next year, below projections published in March. “The energy shock stemming from the conflict in the Middle East is real and severe,” OECD Secretary-General Mathias Cormann stated during the report presentation. It is resulting in elevated expenses and increased unpredictability for households and enterprises globally. The organisation indicated that the closure of essential energy shipping routes and disruptions to global supply chains have intensified pressure on commodity markets, especially in the sectors of oil and fertilisers. For Latin America, the direct impact is anticipated to be less severe compared to Asia or the Gulf region, which are more reliant on energy imports from the Middle East.
However, economists at the OECD cautioned that increasing fertiliser prices may ultimately translate into elevated food production costs and consumer prices throughout the region. The report maintained Argentina’s growth forecast for 2026 at 2.8 percent, while it made a slight upward adjustment to Brazil’s outlook at 1.6 percent and reduced Mexico’s projection to 1.3 percent. Among the world’s major economies, India is projected to sustain its position as the fastest-growing large economy, with an anticipated growth rate of 6.3 percent, surpassing China’s expected growth of 4.5 percent. The United States is projected to expand by two percent, while the eurozone is expected to grow just 0.8 percent. Spain is projected to exceed its European counterparts with a growth rate of 2.2 percent, in contrast to the 0.7 percent anticipated for both Germany and France. The OECD anticipates that inflation within the G20 economies will increase from 3.4 percent in 2025 to four percent in 2026, subsequently moderating in 2027 as energy and food prices stabilise. In light of this context, the organisation called on governments to lessen their reliance on imported hydrocarbons, diversify their energy sources, and exercise prudence with fiscal support initiatives. It also urged central banks to maintain vigilance against wider inflationary pressures.
In its report, the OECD projected that Argentina’s GDP will expand by 3.5 percent in the coming year, primarily fuelled by exports from the energy, mining, and agricultural sectors. The assessment was generally positive, with OECD officials observing that “private investment is benefiting from an increasingly favourable business environment.” They cautioned, however, that “private consumption growth will remain modest, limited by high interest rates and a slow recovery of real wages.” The OECD commended President Javier Milei’s administration for enhancing reserve accumulation at the Central Bank and forecasted that the recently enacted labour market reform, “once implemented, will support formal job creation.” It further advocated for the removal of “distortive taxes,” a “broadening” of the tax base, and “simplification” of the tax system. Phasing out inefficient subsidies, enhancing public-sector efficiency, and substituting distortionary taxes with broader income and consumption taxes would bolster macroeconomic stability. Eliminating remaining natural gas subsidies, while providing support to low-income households, would provide market signals to steer resources towards alternative energy sources in the longer term’, stated the OECD. Earlier in the week, OECD officials indicated that a significant opportunity exists for Latin America as global powers search for alternatives to China for the supply of critical minerals vital to the energy transition and the growth of digital technologies.
Speaking at the OECD’s 18th International Economic Forum on Latin America and the Caribbean in Paris, Cormann stated that the region was uniquely positioned to benefit from the reorganisation of global supply chains. “The world is presenting Latin America and the Caribbean with an unparalleled opportunity,” he stated. Demand for critical minerals is on the rise, and the region possesses precisely what global markets require. Argentina plays a significant role in that strategy. Alongside Bolivia and Chile, it constitutes a segment of the Lithium Triangle, which is recognised for housing some of the largest reserves of the battery metal globally. The country is increasingly drawing attention from the United States and European nations aiming to secure supplies of strategic minerals beyond China. Brazil possesses over 20 million tonnes of rare earth reserves, as estimated by the United States Geological Survey, positioning it as the second-largest holder of such resources globally, following China. Chile and Peru are significant producers of copper, whereas Cuba serves as a notable source of cobalt.