World Bank cuts Argentinas 2026 growth prospects from 4.6% to 4%

The World Bank trimmed the forecast for Argentina’s growth from 4.6% to 4% in its January Global Economic Prospects report published on Tuesday. The organization had made the previous projection in June. According to the document, the country’s GDP is also expected to increase by 4% in 2027. “Domestic policy uncertainty late last year led to bouts of exchange rate pressure, prompting increases in market interest rates that are expected to weigh on domestic demand and growth this year,” the World Bank said in its report. The document also highlighted that the support Argentina received from the United States, “including the provision of swap lines, helped stabilize financial conditions.” In October, Argentina received a US$20 billion currency swap line from the Trump White House. The Javier Milei administration used an undisclosed amount to stave off a run against the peso ahead of the October legislative elections, which they paid off last week. The World Bank also said that “the transition to an exchange rate band in April 2025 is projected to increase exchange rate flexibility, strengthening the exchange rate’s role as a shock absorber.” Before that, Argentina had a crawling peg scheme, in which the peso depreciated by only 1% per month. The government has recently relaxed its exchange rate regime even further, as it now updates the currency bands based on inflation. The report also noted that “the marked tightening of fiscal and monetary policy has substantially dampened inflation.”Prices in Argentina increased 31.5% in 2025, the lowest inflation rate since 2017, according to a report by the INDEC statistics bureau.