The escalation of conflict in the Middle East put emerging economies to the test again and, in that more complex map, several Wall Street banks placed Argentina among the most vulnerable countries to an eventual shock global financialdespite the fact that the Government trusts that the macroeconomic order will be an anchor to navigate the turbulence.
Reports of the Citi, Morgan Stanley, JP Morgan, Barclays, Wells Fargo y Bank of America (BofA) They agreed that the economic program of Javier Miley made significant progress—especially in tax order and reduction of inflationary inertia—but warn that the economy still faces weaknesses structural that could be amplified if international volatility increases. Among them they mention the low level of reserves, costly external financing, an exchange rate that they consider appreciated and inflation that remains high, despite the significant reduction achieved since 2023.
In a documents on vulnerability of emerging markets ante shocks geopolitical, the Wells Fargo bank placed the country among the economies with the greatest exposure to an interruption of capital flows. The financial entity pointed out that countries with low international reserves and strong dependence on external financing are the most sensitive to episodes of crisis. “sudden stop”, That is, when investors take refuge in assets considered safe and reduce their exposure to emerging markets.
“Argentina and Türkiye appear among the countries with the greatest vulnerability to this scenario”the report noted.
A similar diagnosis emerged in the analysis of Citi and Morgan Stanley, which warned that countries with more fragile external fundamentals tend to be those that face greater corrections when global uncertainty intensifies. In this framework, the analysts highlighted that The Argentine economy still depends on the reconstruction of reserves and the normalization of the exchange market to reduce its external vulnerability.
In his latest report on Argentina, the Citi He stated that the country shows “initial signs of stabilization” under the Milei government, supported by fiscal discipline and the sharp reduction in inflation from the crisis levels left by the Alberto Fernández administration. However, The bank warned that the process still faces relevant challenges, especially on the external front. One of them is the level of international reserves, which continues to be one of the weakest points of the macro scheme. Although the Central Bank (BCRA) began buying dollars in recent months, Citi noted that the impact on net reserves remains limited, since part of those funds is used for debt payments.
In this context, the bank considered that this stage of the economic program could be conducive to advancing in the liberalization of the exchange market and eliminate the remaining controls (traps). At the same time, he warned that the recent volatility of interest rates generated uncertainty about the direction of monetary policy and made credit expansion difficult.
The estimates of JP Morgan They reflected the same tension on the external front. The bank calculated that the BCRA’s liquid reserves—the entity’s firepower—are around US$18.5 billion, but that the net reserves—excluding reserve requirements in dollars and credit lines swap— continue to be negative, close to US$2.4 billion. So far this year, the BCRA has purchased more than US$2.8 billion in the foreign exchange market, in line with the official reserve accumulation program.
Although the recent financial flow allowed the level of reserves to be partially recomposed, The bank warned that part of those dollars comes from debt placements or external financing of companies.
The exchange front is another point where nuances appear between the Government and some international analysts from the most important banks. While the Minister of Economy, Luis Caputo, He maintained that the dollar is not behind and defended the exchange band scheme, Some international banks raised doubts about the competitiveness of the peso.
Barclays He stated that the real exchange rate could be relatively appreciated, which would limit the economy’s capacity for growth. “We believe that the current real exchange rate is probably too strong for economic growth to improve significantly,” the report noted.
According to the international bank, after the initial strong depreciation of the economic program, The real multilateral exchange rate weakened by around 35% between April and September -before the elections-, but then it was appreciated again, which left the peso at a level that could affect competitiveness. Along these lines, Morgan Stanley pointed out that the BCRA’s dollar purchase program also fulfills the function of avoiding excessive appreciation of the peso in a context of greater foreign exchange inflows.
The analysts also stressed that The next stage of the disinflation process will be more complex. Barclays estimated that the price increase will remain relatively high for longer than initially expected and projected that the annual index will be close to a 25% this year.
Besides, shocks external factors—such as a rise in the international price of oil—could add pressure on prices, although the banks agreed that the impact would be relatively limited for the Argentine economy. Morgan Stanley estimated that a 10% increase in the price of crude oil could add between 0.2 and 0.4 percentage points to annual inflation, while Citi estimated an impact of between 1 and 2 points.
Despite these vulnerabilities, banks also highlighted some structural strengths of the Argentine economy. The main one appeared in the energy sectorwhich in recent years became one of the driving forces of the external front. Bank of America (BofA) pointed out, for example, that the country has already established itself as net oil exporterwith a production close to 860,000 barrels per day, which boosts the income of dollars and supports investment in the sector. The bank highlighted that the energy trade surplus improves by around US$2 billion per year and approaches the US$8 billiona trend that could strengthen in the coming years.
At the same time, BofA recently adjusted its strategy in the Argentine market and decided close your recommendation to position yourself in Global 2035 bondsafter the accumulated gains since last year, although he maintained a positive view on Argentine external debt in general.
“We continue with a constructive vision and maintain our recommendation to overweight Argentina’s external debt”the report noted, although it indicated that the country remains vulnerable to an increase in global risk aversion, which usually causes an outflow of capital from emerging markets.
The Government affirmed that the country is better prepared to face this context. In an exhibition at the Mediterranean Foundation, Caputo said that “the best shield is to have an orderly macroeconomy” and confirmed that the Executive will maintain fiscal discipline and the current exchange rate scheme.
The official also noted that Argentina does not plan to return to international debt markets in the short termsince it considers that the country risk—which remains above 500 basis points—still does not reflect the current fundamentals of the economy. This would imply that the country ends up paying an interest rate for an eventual issue that would be above what the Government expected or desired.
This diagnosis coincided with another recent analysis of the Argentine economy. A report of the Inter-American Development Bank (IDB) described a paradox: The country appears among those that would grow the most in the region – with a rebound of 4.3% in 2025 and an expansion close to 3% in 2026 – but at the same time it has the highest index of “financial vulnerability” in Latin America against external shocks. The indicator measured the sensitivity of country risk to episodes of global turbulence and placed Argentina as the most exposed economy in the region.
For international analysts, however, the true test of the economic program will be on the external front. The combination of still limited reserves, doubts about exchange competitiveness, costly external financing and dependence on international markets This is what explains why several banks continue to place Argentina among the emerging economies most vulnerable to a shock global.
At the same time, the growth of the energy sector and the export potential of natural resources appear as the country’s main cards to reduce this fragility in the coming years.
