Argentina's Economy Surges 5% Year-On-Year on Peso Weakness, Political Clarity

Argentina's Economy and Financial Market Outlook

Argentina's economy expanded more than expected in September 2025, defying heightened market volatility caused by local and national midterm elections. The national statistics agency reported that economic activity rose 0.5% from August and 5% compared to the same month of the previous year. This performance outpaced the 1.9% annual expansion forecasted by economists.

The political landscape shifted dramatically during this period. On Sept. 7, voters in Buenos Aires province, home to 40% of the population, delivered a heavy defeat to President Javier Milei's party, sending asset prices tumbling. However, Milei staged a major comeback in a landslide victory on Oct. 26, bolstering confidence in his pro-market agenda.

The peso weakened 2.6% in September, enhancing competitiveness in export sectors long constrained by an overvalued exchange rate. This dynamic contributed to the economy's strong performance despite the political turbulence.

The peso's depreciation made Argentine exports more attractive, providing a much-needed boost to industries such as agriculture and manufacturing according to market analysis. The weaker currency also reinforced the government's commitment to market-driven reforms, which have been central to Milei's economic strategy.

The political outcome in October significantly influenced investor sentiment. Milei's party more than doubled its representation in Congress, reducing the likelihood of a shift back to leftist policies. This development led to a rally in asset prices and restored confidence in the reform agenda.

Economists are optimistic about Argentina's economic trajectory for the year. Despite a 30% inflation rate, they forecast the economy to grow 3.9%. This projection is supported by the recent political developments and the ongoing structural reforms.

A Resilient BNPL Market Amid Inflation

The Buy Now Pay Later (BNPL) sector in Argentina is experiencing robust growth, with the market expected to reach US$2.15 billion in 2025. The BNPL market grew at a compound annual rate of 53.5% from 2021 to 2024, and this momentum is expected to continue with a 23.5% growth rate through 2030.

The rise of BNPL services is driven by innovations in e-commerce and offline retail, with platforms like MercadoLibre and Tiendanube offering flexible payment plans. These services are particularly attractive in an inflationary environment, as they allow consumers to manage cash flow more effectively.

Fintech integration has further accelerated BNPL adoption. Platforms such as Uala and MercadoPago have embedded BNPL features into their apps, appealing to a younger, tech-savvy demographic. This digital expansion is helping to expand market access and drive broader adoption.

Market Dynamics and Financial Sector Outlook

Banco BBVA Argentina (BBAR) is set to release its Q3 2025 earnings on Nov. 25, with consensus estimates projecting $0.20 per share and $530.7 million in revenue. The bank has seen strong loan growth, which is expected to continue powering its performance. The political and economic developments in the country are likely to influence investor expectations for the bank's results.

The political landscape also had a direct financial impact. The U.S. Treasury provided Argentina with a $40 billion financial package, including a $20 billion currency swap and a $20 billion private-debt facility. This support helped stabilize the peso and restore investor confidence in the country's economy.

The impact of this financial intervention extended beyond Argentina's domestic market. Central banks around the world are watching the situation closely, as it highlights the geopolitical dimensions of economic policy and currency stability. The move by the Trump administration demonstrated the strategic use of financial tools to influence political outcomes and stabilize markets.

Looking Ahead

Argentina's economy has shown resilience amid political uncertainty and high inflation. The midterm election results initially triggered market panic, but Milei's subsequent landslide victory restored investor confidence. This stability, coupled with structural reforms and a competitive exchange rate, has supported economic growth.

The BNPL sector is poised to continue its expansion, driven by e-commerce growth and fintech innovation according to industry reports. As Argentina's economy adjusts to the new political landscape, the BNPL market will likely serve as an important tool for managing consumer spending and supporting economic resilience.

Investors are now watching how the government will implement its reform agenda in the coming months. The combination of political stability, market-friendly policies, and a growing BNPL sector could shape Argentina's economic outlook for years to come.