JP Morgan Cut Its Growth Forecast for Argentina and Warned of Possible Technical Recession

JP Morgan revised its assessment of the Argentine economy three times in one week and ultimately cut its 2026 growth projection from 2.6% to 1.5%. The U.S. bank also suggested that the country could face a technical recession.

The shift in outlook came after a year-over-year economic activity decline of 2.9% was reported, along with poverty rising to 32.3% during the first half of the year. The figure halted three consecutive periods of decline, while at the start of Javier Milei's administration the indicator stood at 52%.

Days earlier, the bank had indicated that Argentina could regain investment-grade status, a rating that would facilitate inflows of international capital and reduce country risk. The nation held that status between 1994 and 1998 before losing it and reaching its lowest level during the 2001 crisis.

JP Morgan attributed part of the monthly decline to transitory factors, including fewer working days due to holidays, reduced working hours in some sectors during the World Cup, gas supply disruptions, and adverse weather conditions. According to the analysis, rainfall and snowfall affected construction, mining, and certain service sectors.

The bank also linked the performance of Argentine assets to political risk associated with the electoral process. In that context, it stated that without this component, country risk could be around 450 basis points, compared to levels above 600 basis points cited by local consultancies.

EconViews also identified a less favorable international environment, with elevated rates in the United States, a stronger dollar, and lower appetite for risk assets. The consultancy noted that economic activity remains weak, that export-oriented sectors have yet to generate broad spillover effects on the rest of the economy, and that deteriorating employment and incomes add pressure on the Government.