1. The government submitted the 2027 budget to Congress
On Tuesday, the Executive Branch submitted the 2027 National Budget Bill to the Chamber of Deputies. In terms of fiscal policy, it sets a target of a national government surplus estimated at $3.3 trillion, with total expenditures of $202.1 trillion, current and capital revenues of $202.3 trillion, and notional expenditures and their financing totaling $35.1 trillion. The bill authorizes the Chief of Staff to modify and reallocate budget appropriations and to define the restructuring powers of each agency. Furthermore, it authorizes the repayment of government debts through bonds and securities, and provides that the Central Bank of Argentina’s (BCRA) non-transferable bills be renewed upon maturity in 2027. In the areas of environment and energy, it allocates $24,668 million and $3,654.56 million to the conservation and protection of native forests; a fiscal allocation of $3,000 million for benefits under Law 26,190 on renewable energy; and exempts imports of up to 1 million cubic meters of gas oil and diesel for electricity generation from taxes on liquid fuels and carbon dioxide. Regarding infrastructure, it provides tax and customs exemptions for imports of goods for railway and subway projects, as well as tax benefits for new public works concessions on national highways. On the social front, it eliminates the automatic adjustment of family allowances and maintains the Non-Contributory Work-Related Disability Pension at 70% of the minimum pension, but eliminates its adjustment mechanisms. The bill projects GDP growth of 4% for next year, year-over-year inflation of 18%, an exchange rate of $1,847.6 per dollar by December, and a trade surplus of USD 15,560 million.
La Nación: Las 10 claves del presupuesto 2027 de Javier Milei: cómo se moverán el dólar, los precios y los salarios
2. The economy is losing momentum, while unemployment and informal employment are on the rise
The Argentine economy lost momentum and now faces a combination of factors that is beginning to raise red flags for the coming months. According to the National Institute of Statistics and Censuses (INDEC), GDP contracted by 0.6% in the second quarter of the year compared to the first three months of 2026, affected by a sharp decline in consumption and investment. Investment has now posted five consecutive quarters of year-over-year decline and remains below the levels seen at the end of 2023. The data marked a break from the start of the year: between January and March, GDP had grown 0.7% on a seasonally adjusted basis. Between April and June, however, the downturn affected virtually all components of domestic demand. The picture looks different when compared to a year ago: GDP grew 2% year-over-year and posted a 2.2% increase during the first half of the year. However, this improvement was marked by significant variation, as exports rose 13.7%, while private consumption increased by a mere 0.4% and investment plummeted 11.1%. The slowdown in economic activity is occurring alongside a labor market that is also showing signs of strain. The unemployment rate stood at 7.9% in the second quarter, compared with 7.6% in the same period last year and 7.8% in the first quarter. Meanwhile, the informal sector accounted for 45% of the workforce in the second quarter of the year, reflecting an increase both year-over-year and quarter-over-quarter. In practice, this represents an increase of 1.8 percentage points compared to the second quarter of 2025 and 0.8% compared to the first three months of 2026.
3. The Senate passed the Tax Innocence II bill into law and gave preliminary approval to the new biofuels regime
On Thursday, the Senate approved three bills sponsored by the ruling party, with support from allied blocs and various sectors of the opposition. Tax Innocence II became law (with 44 votes in favor, 23 against, and no abstentions), while the new biofuels regime and the judicial transfer agreements between the national government and the Autonomous City of Buenos Aires will continue to be debated in the Chamber of Deputies. The votes revealed differences among the blocs regarding tax benefits, competitive conditions for the biofuels industry, and the financing of the transfer of judicial functions. This was one of two sessions agreed upon by the ruling party and its allies during the Parliamentary Working Group meeting. The second session will take place next week, when the Senate will consider the reform of the Central Bank’s Charter, where differences persist regarding the system for appointing and removing its officials, and the regulatory framework for the Carbon Market. However, despite having a motion of preference with a committee report, Edith Terenzi’s (Despierta Chubut) Ecocide bill will not be discussed because there is still no agreement and amendments are being considered.
Ámbito: Con el acompañamiento de los aliados, se sancionó Inocencia Fiscal II en el Senado
4. Industrial capacity utilization fell for the ninth consecutive month
Argentina’s manufacturing industry saw a decline in capacity utilization in July. According to INDEC, the sector operated at 58.2% of its maximum capacity, a figure 0.2 percentage points lower than in July 2025 and 0.9 points below the June level. It was the ninth consecutive month in which the industry operated at less than 60% of its capacity. The sectors with the highest utilization rates were petroleum refining (89.9%), basic metal industries (71.8%), paper and cardboard (69.6%), food and beverages (66.0%), and chemicals and chemical products (61.4%). In contrast, the following sectors fell below the average: publishing and printing (54.6%), nonmetallic minerals (48.6%), textiles (45.3%), tobacco (45.2%), rubber and plastics (40.2%), the automotive industry (39.0%), and the metalworking sector, excluding motor vehicles (38.3%). The largest year-over-year declines occurred in the metalworking sector (-10.7 percentage points), nonmetallic minerals (-8.5 percentage points), and the automotive industry (-5.1 percentage points). In the case of the metalworking sector, INDEC attributed the decline to lower production of agricultural machinery and household appliances such as refrigerators and washing machines, which plummeted 46.6% and 20.9% year-over-year, respectively. The non-metallic minerals sector was affected by lower production of glass, cement, and construction materials, while the automotive sector suffered from weak demand, tighter credit, and increased market penetration by imported cars. The previous week, the agency had already reported that the Industrial Production Index fell 4.9% year-over-year and 5% month-over-month.
5. The government takes its first steps following Milei’s announcements regarding the Malvinas
During a radio interview, Defense Minister Carlos Presti stated that construction of the Ushuaia Integrated Naval Base announced by President Milei during last week national address regarding Malvinas will begin in January, while estimating that the project will require an investment of $450 million over four years. He stated that the new Base will secure Argentine presence in the South Atlantic, said that he recently visited the site designated for construction, and questioned the progress of the projects announced during the previous administration. The government’s plan also includes infrastructure work at the Petrel Antarctic base, including the expansion and reinforcement of a landing strip. This comes on top of the executive branch’s bill, which was submitted to the Chamber of Deputies yesterday, regarding the defense of national sovereignty in the Malvinas. The bill aims to penalize those who exploit natural resources unlawfully by increasing penalties and creating new criminal offenses; it extends the prohibition on contracting with disqualified parties to any individual or legal entity domiciled in, incorporated in, or conducting economic activities in Argentina; and it authorizes procedures such as trials in absentia. It also incorporates a Voluntary Disclosure and Regularization Program for those currently engaged in prohibited activities.
Clarín: “No es en contra de nadie, sino a favor de una solución pacífica”, dijo el ministro de Defensa tras los dichos de Trump sobre Malvinas