For the World Bank, Argentina is “the only exception” in Latin America: these are the causes

According to World Bank projectionsLatin America and the Caribbean will grow 2.1% this year, below the 2.4% in 2025and GDP per capita barely advances. In this context, Argentina projects an increase 3.6% by 2026 and 3.7% by 2027, against an accumulated fall of 0.4% between 2011 and 2024. The bank calculates that accumulated growth for 2024–2027 would reach 12.2%.

Among the reasons for this positive performance, the World Bank attributes Argentina’s turn to shock fiscal adjustment faced by the current administration: the country went from a considerable deficit in 2023 to both a primary and general surplus (after interest payments).

The mechanism was the rationalization of spending, cuts in administrative inefficiencies and the elimination of energy subsidies to higher-income sectors. The result was a sharp drop in sovereign risk: the EMBI spread went from an average of 2,200 basis points in 2022–2023 to less than 600 in March 2026.

At the same time, the organization stood out as one of the catalysts for this growth by Incentive Regime for Large Investments (RIGI), which reduced the Income Tax rate from 35% to 25% for projects in energy, mining, technology, infrastructure and other sectors.

The World Bank notes that this is consistent with its own previous analyses, which indicated that the corporate tax burden in the region was high and distortive. Also highlights the agreement between the United States and Argentina for critical minerals signed in Februaryand the Mercosur-European Union pact ratified by the Argentine Congress, as complementary external anchors.

However, The organization does not rule out risks on the horizon for Argentina: The Central Bank maintains net negative reserves and limited access to international debt markets, which generates considerable external financing needs.

Credit to the private sector remains around 15% of GDP, the lowest level throughout the region, a consequence of years of macroeconomic instability. The report indicates that a sustained credit recovery will depend on the stabilization process continuing.

The World Bank report dedicates a specific section to analyzing the Tierra del Fuego regime, using it as a critical example of “failed industrial policy” due to political interference and design errors that have persisted for decades.

The organization highlights that, although the regime was created in 1972 to promote population growth and employment through tax exemptions, its current structure generates a substantial fiscal cost of approximately US$1.07 billion annually without having achieved significant improvements in productivity or local technology.

According to the analysis, the scheme presents structural flaws that encourage companies to import inputs without customs duties to resell them in the continental market at higher prices, generating little or no added value real on the island.

The World Bank warns that These companies depend almost exclusively on fiscal transfers of the State to be viable and that the extension of the regime until 2038 was carried out without establishing performance conditions or transition planswhich reinforces a growing tax burden and distortions in the market.