Updates Confirm Brazil as Argentina’s Top Trading Partner for Over Three Decades

Brazil has remained Argentina’s leading trade partner uninterruptedly since 1991. No other country in the world maintains such a strong bilateral trade relationship with Argentina as Brazil. The economic ties between Brazil and Argentina can be traced back to the early days of the young Argentine and Brazilian nations. Argentina was the first country to recognize Brazil’s independence.

The formal establishment of diplomatic relations over 200 years ago paved the way for multiple areas of cooperation. The most prominent recent project has been Mercosur, the customs union that includes both countries, Uruguay and Paraguay. This union implements policies such as a standard external tariff (CET) for goods originating from non-member countries, promoting intraregional trade. Within this framework, the economic ties between Brazil and Argentina have flourished, with trade between the two nations becoming a cornerstone of Mercosur’s success.

In 2024, Argentina sent 17% of its exports to Brazil and sourced 23% of its imports from there, percentages consistent with averages over the past decade. Brazil is the primary export destination for Argentina’s automotive and wheat sectors, the country’s fourth and fifth-largest export industries. Over the past decade, the automotive sector has been the largest exporter to Brazil, accounting for 40% of trade with the neighboring country. Brazil is also one of the leading destinations for Argentina’s manufactured industrial products (MOI), with approximately 38% of MOI exports heading to Brazil.

Beyond the automotive and industrial sectors, the wheat sector accounts for nearly 10% of trade with Brazil. Preliminary shipping data shows that 53% of the wheat exported by Argentina in 2024 was destined for Brazil. In addition to grain, Brazil is the primary destination for Argentina’s wheat flour exports. These examples underscore the strength of the economic ties between Brazil and Argentina, which extend beyond manufacturing to include essential agricultural products.

In the agribusiness and regional economies sector, Brazil is a significant market for products such as dairy, wine, olive oil, pears, apples, vegetables, and others. For this essential role, and despite the historic drought, Brazil was the leading trading partner for six Argentine provinces in 2023. Furthermore, agriculture represented nearly 30% of shipments to Brazil when considering exports from the agribusiness sector.

Additionally, Brazil is the second most important destination for Argentina’s service exports, with over USD 1.9 billion in services exported in 2023. Brazil is also Argentina’s fourth-largest foreign direct investment (FDI) source, with a stock of over USD 13.5 billion as of the second half of 2024. Thus, over 8% of FDI in Argentina comes from Brazilian capital. This robust investment flow further highlights the enduring economic ties between Brazil and Argentina, with Brazilian capital playing a vital role in Argentina’s economic landscape.

Brazil’s Role Amid Argentina’s Recent Export and Currency Context

At the end of 2023, approximately 4.9 Brazilian reais were required to buy one US dollar. A year later, at the close of 2024, more than six reais were needed to purchase a dollar. As highlighted last week, the real was the most depreciated currency in 2024. As of December, Brazil’s consumer price index stood at 4.27% for the first 11 months of the year. Consequently, a devaluation of over 24% alongside inflation well below that rate implies a gain in price competitiveness for Brazil, albeit within a challenging context for Argentina’s principal trading partner.

Amid an even more challenging domestic economic environment, Argentina’s necessary and sustained reduction in inflation rates during 2024 led to an appreciation of the peso. This occurred partly due to real devaluations undertaken by Argentina’s main trading partners and domestic price increases outpacing monthly devaluation rates.

As a result, Argentina’s real exchange rate with Brazil was at its lowest level in nine years at the end of 2024. This directly impacts Argentina’s export costs, making its products relatively more expensive globally, particularly in Brazil. Even so, the economic ties between Brazil and Argentina remain strong in critical sectors such as wheat, with Argentina accounting for 65% of Brazil’s wheat imports last year.

However, recent developments have seen Brazil increasingly sourcing wheat from Russia. Although Russian wheat imports to Brazil began in 2018, significant volumes were not recorded until 2022, surpassing USD 116 million that year.

Due to Argentina’s drought in 2022/23, Russian wheat imports rose to nearly 0.9 million tons and over USD 270 million in 2023. Despite Argentina’s recovery, Russian wheat imports remained at 0.7 million tons, valued at USD 188 million in 2024.

While Russian wheat does not dominate Brazil’s wheat imports, it accounted for 11% in 2024. The high quality of Argentine wheat, the Mercosur external tariff for non-bloc wheat, and freight costs limit Russia’s share in this market. However, rising costs in Argentina, the weakened Brazilian real, and falling global FOB prices could complicate Argentina’s wheat export conditions in Brazil. Since May 2024, wheat prices from Argentina dropped 24%, compared to only 6% for Russian wheat, following both countries’ harvests.

Competition Between Argentina and Brazil Goes Beyond Football

Brazil is a strategic market for Argentina and a competitor in key export sectors. While Argentina is the world’s top soybean meal and oil exporter, Brazil leads in soybean exports, beef, and corn. Despite the historic drought, these sectors accounted for approximately 44% of Argentina’s exports in 2022 and over 35% in 2023.

Amid a scenario of the peso strengthening against the real, Brazil gains a broader margin to operate with better premiums than other countries when placing goods on the international market. This could favor Brazilian soybean meal exports over Argentina’s in markets such as the European Union, the world’s top importer and the primary buyer for both countries. The EU’s soybean meal imports are divided into thirds between Argentina, Brazil, and other origins.

A similar situation could arise for beef exports to China and soybean oil exports to India. Both countries are the largest buyers of these products from Argentina and Brazil. The economic ties between Brazil and Argentina remain vital in these markets, but competition poses challenges for Argentina as Brazil leverages its cost advantages.

Historically, Brazil has also been a more attractive destination for foreign direct investment than Argentina. While Brazil captures 57% of South America’s FDI and is the world’s fifth-largest FDI recipient, Argentina receives just 10%. Although Argentina’s share of South American FDI increased to 18% in 2023, reaching USD 23.87 billion, this growth was primarily driven by restrictions on capital movement, intercompany loans, and profit reinvestment, as noted in ECLAC’s latest FDI report. New capital contributions accounted for only 8% of investment in Argentina in 2023, compared to 49% in Brazil.

The significant and necessary reduction of Argentina’s country risk positively enhances the investment climate. However, rising corporate costs in dollar terms could complicate the investment landscape compared to Brazil, where costs are relatively lower in exchange terms. If this trend continues, Brazil could attract more FDI at Argentina’s expense.

The Peruvian Ministry of Economy and Finance has recently highlighted the potential for a BlackRock investment in Peru. Minister José Arista forecasts private investment in the country to reach $50 billion by the end of 2025. BlackRock, the world’s largest investment fund, expressed interest in Peru during discussions held at the World Economic Forum in Davos, Switzerland.

Peru’s Commitment to Attracting Foreign Investment

According to Minister Arista, this engagement reflects Peru’s growing attractiveness as an investment destination and underscores the government’s commitment to fostering foreign investment.

“This was not only a very fruitful meeting but also a very busy one. President Boluarte’s presence demonstrates to investors the country’s commitment to attracting foreign investment,” Minister Arista stated during an interview with TV Perú.

Building Investor Confidence at Davos

He emphasized that the Peruvian delegation’s efforts at Davos were a powerful signal to international investors about the nation’s stability and openness to collaboration. Many investors have appreciated this and sought bilateral meetings with the President. Unfortunately, meeting all of them was impossible, but many had very productive discussions with the Peruvian team led by President Boluarte,” he added.

Interest in Long-Term Opportunities in Peru

Speaking from Davos, Minister Arista underscored that one of the most significant outcomes of Peru’s participation in the World Economic Forum was the commitment of numerous investors to visit Peru to evaluate long-term investment opportunities.

The Mining Sector as a Key Focus for Investment

The minister elaborated on the specific sectors that attracted interest, highlighting the mining industry’s critical role. “They expressed interest, particularly in the mining sector, which requires a much more stable environment because mining investments remain in the country for many years. This is different from setting up a factory, which you can establish one day and, depending on circumstances, move elsewhere,” he said.

Peru’s Economic Stability as a Competitive Advantage

The minister further explained that international investors are particularly interested in Peru’s economic stability and abundant natural resources. “In this context, they are asking for greater stability, and many have committed to visiting the country. They highly value Peru’s economic stability, viewing it as a reliable, attractive nation with numerous opportunities and abundant resources. They are quite interested in exploring and proposing additional investment projects for the country,” he noted.

Private Investment: A Pillar of Economic Growth

Minister Arista emphasized the importance of private investment in driving Peru’s economic growth. “Whether domestic or foreign investment, it is crucial for the country. By the end of 2025, we will have surpassed $50 billion in private investment,” he stated. He also highlighted that private investment accounts for 80% of the total investment in Peru, making it a critical component of the country’s economic strategy.

BlackRock’s Interest as a Positive Signal

The minister noted that the activities carried out by the Peruvian delegation, led by President Dina Boluarte, significantly boosted investor interest in Peru. “These efforts send messages to all investment funds. We met with BlackRock, the world’s largest investment fund, and they are also very interested in investing in Peru,” he highlighted.

The Potential Impact of BlackRock’s Entry into Peru

The potential BlackRock investment in Peru is a testament to the nation’s ability to attract high-profile investors seeking stable and profitable opportunities. Minister Arista stressed that fostering private investment is essential for achieving the government’s economic goals.

Boluarte’s Role in Strengthening Investor Relations

The minister also described President Dina Boluarte’s presence in Davos as a significant factor in strengthening ties with international investors. “This was a great opportunity for her to understand the level of interest investors have in Peru and what they seek from the country,” he said.

Macroeconomic Stability: A Distinct Advantage

One key message the Peruvian delegation conveyed was the country’s macroeconomic stability. Minister Arista highlighted that Peru’s ability to maintain stability sets it apart from other Latin American countries. “Many of them ask us: ‘How do you do it? What do you do? How is it possible that despite certain political turbulence, Peru has demonstrated over 25 years of economic stability that is almost unheard of for a Latin American country?’” Arista remarked.

The Sol: A Symbol of Peru’s Financial Reliability

This stability is further reflected in the strength of Peru’s currency, the sol, often called the “Andean dollar.” Minister Arista noted that the sol is even used in neighboring countries like Bolivia and the border regions of Brazil due to its reliability. “They refer to it as the ‘Andean dollar,’ which underscores the seriousness of the country’s economic management,” he concluded.

BlackRock Investment as a Catalyst for Growth

The potential for a BlackRock investment in Peru aligns with the country’s broader strategy to attract foreign capital and leverage its natural resources for sustainable development. The mining sector, in particular, presents a significant opportunity.

Government Policies Supporting Investment Growth

Minister Arista also acknowledged the importance of aligning government policies with investor expectations. “Investors are looking for stability and predictability,” he said. “These are the foundations for building long-term partnerships that benefit both the country and the investors.”

Future Plans for Investment Engagement

Looking ahead, the Peruvian government is committed to building on the momentum generated at Davos. Minister Arista emphasized the importance of maintaining open lines of communication with international investors and addressing their concerns.

Conclusion: Peru’s Path to Economic Success

In conclusion, the potential BlackRock investment in Peru represents a significant milestone in the country’s efforts to attract foreign capital and drive economic growth. With a clear focus on stability, resource management, and investor engagement, Peru can achieve its ambitious goals and solidify its status as a leading investment destination in Latin America.

Honduran economist Julio Raudales recently described Foreign Minister Enrique Reina’s statements as “careless.” Reina claimed that the temporary suspension of U.S. cooperation affects the private sector and NGOs more than the central government. Raudales emphasized that international resources finance 60% of Public Investment in Honduras.

“What the Foreign Minister said is careless and shows how little understanding some officials have about crucial aspects of the country,” Raudales stated. The former president of the Honduran College of Economists (CHE) highlighted the importance of external resources allocated to projects that drive national development.

“This is such an important issue for the country that 60% of our public investment program is funded by international cooperation,” Raudales said, referencing institutions such as the World Bank (WB), the Inter-American Development Bank (IDB), the Central American Bank for Economic Integration (CABEI), the European Union, and now the Development Bank of Latin America and the Caribbean (CAF). These resources are vital for sustaining public investment in Honduras and ensuring key infrastructure and development programs remain viable.

Raudales also criticized the decision to transfer the management of international cooperation from the Ministry of Planning to the Ministry of Foreign Affairs, a change made during the 2014–2022 administrations under former President Juan Orlando Hernández. “There was an institutional breakdown in the management of cooperation,” he said, recalling that since the 1960s, cooperation programs had been managed by the Superior Council of Economic Planning (Consuplane), later by the Ministry of Planning (Seplan), and in the 1990s by the Technical Secretariat for International Cooperation (Setco).

Now, with the Ministry of Foreign Affairs in charge, Raudales argues, “international cooperation has become a matter of bureaucracy rather than understanding the country’s development process within the framework of international cooperation. We must pragmatically accept that many of our development programs are funded by international resources,” he insisted. These resources play a fundamental role in Public Investment in Honduras, allowing the country to achieve progress in areas it otherwise could not finance.

He added that in large countries like Spain, Germany, Canada, and the United States, international cooperation is managed through foreign ministries because it is considered a policy tool. However, in Honduras, it is more of a development tool.

Fostering Dialogue with the U.S.

For her part, Lidia Fromm, former Director General of International Cooperation, said the government must establish an open dialogue with the United States, understanding that the country will review its cooperation commitments over the next 90 days.

“It’s important to consider who the Secretary of State is—Marco Rubio, the son of Cuban migrants—and I believe there is an opportunity for us, as Latin Americans and as a U.S. ally, to send messages and reach agreements that benefit us as a nation,” she said.

Fromm stressed that the impact of the U.S. pause in cooperation with countries like Honduras should not be minimized, as it ultimately affects not only NGOs and the private sector but also the beneficiaries of their programs and public sectors.

“A key feature of U.S. cooperation is its significant work with municipalities, which is commendable since it’s uncommon. If we lose that cooperation, municipalities will also be affected,” she pointed out. The loss of such cooperation would have a cascading effect on Public Investment in Honduras, particularly at the local level.

Consequences of Foreign Aid Suspension

Amparo Canales, former president of the CHE, emphasized that U.S. cooperation complements state actions in various areas, meaning that the beneficiaries of these projects will also be negatively affected.

Canales also recalled that during Donald Trump’s first term, several important projects were canceled, such as those related to climate change and the Governance in Ecosystems, Livelihoods, and Water (GEMA) project. Such suspensions highlight the precarious reliance of Public Investment in Honduras on external funding.

Analyzing the Impact of Cooperation

Ricardo Matamoros, Director of scientific research at the National Autonomous University of Honduras (UNAH), also emphasized that the country’s international resources complement its efforts to lead projects and advance its development agenda. However, interpreting Foreign Minister Enrique Reina’s statements, Matamoros suggested that the minister might have meant that the three-month suspension of U.S. cooperation has a minimal impact on the central government but is more significant for assistance to other sectors of the country.

Matamoros further noted the need to analyze the long-term impact of foreign cooperation, adding that this is not the first time the U.S. and other donor countries have suspended aid to Honduras. This dependency underscores the critical relationship between foreign aid and Public Investment in Honduras, directly influencing the nation’s development trajectory.

According to Foreign Minister Enrique Reina, U.S. cooperation over the last four years amounted to approximately $700 million, most of which was channeled through NGOs and the private sector.

Conclusion

In conclusion, Honduras’s development relies heavily on international cooperation, which funds 60% of public investment in Honduras. The suspension of U.S. aid poses significant risks to municipalities, NGOs, and public programs critical for the country’s progress. While government officials debate the immediate impact of such measures, experts agree that losing these resources will have long-term implications on Public Investment in Honduras and the overall well-being of its citizens. Reassessing institutional management and fostering diplomatic relations with donor nations remain crucial for ensuring continued development funding.

Panama, renowned for its strategic location as a global logistics hub, has emerged as an increasingly attractive destination for manufacturing activities. The country’s advantageous position, nestled between North and South America and providing access to the Atlantic and Pacific Oceans, has long made it a cornerstone of international trade. This unique geographical position, with robust infrastructure and government-backed incentives, makes manufacturing in Panama a lucrative proposition for businesses across various industries.

Why Panama is Ideal for Manufacturing

Strategic Location

Panama’s geographical position is one of its most significant advantages. The country is home to the Panama Canal, a vital artery of global commerce that facilitates the transportation of goods between major markets. Manufacturing companies in Panama benefit from this connectivity, enabling efficient shipping of raw materials and finished goods worldwide.

Additionally, Panama’s proximity to major consumer markets in North and South America offers companies an opportunity to reduce transportation costs and lead times. For businesses looking to expand into Latin America or serve multiple continents, Panama provides a gateway to achieve these goals seamlessly.

Political and Economic Stability

Panama boasts a stable political climate and a growing economy, underpinned by its robust financial services sector and revenue from the Panama Canal. The country has consistently committed to creating a business-friendly environment, further bolstering its appeal as a manufacturing hub.

Connectivity and Infrastructure

Panama’s well-developed transportation and logistics infrastructure distinguishes it from other manufacturing destinations. The country’s ports, including the Colón Free Zone and Balboa Port, are among the most efficient in Latin America. These ports are complemented by Tocumen International Airport, the region’s busiest air cargo hub, and a network of highways and railways connecting major cities and industrial zones.

Key Manufacturing Industries in Panama

Electronics and Technology

Panama’s electronics and technology manufacturing sector has grown steadily in recent years. Companies producing electronic components, telecommunications equipment, and consumer electronics have established operations in the country, leveraging its skilled workforce and proximity to global markets.

Food and Beverage Processing

The food and beverage industry is critical in Panama’s manufacturing landscape. The country’s access to fresh raw materials and modern processing facilities bolsters the production of packaged foods, beverages, and agricultural products. Nestlé and Cervecería Nacional operate large-scale manufacturing plants in Panama, supplying domestic and international markets.

Pharmaceuticals and Healthcare Products

Panama’s pharmaceuticals and healthcare manufacturing sector is rapidly expanding, driven by domestic demand and export opportunities. Manufacturers benefit from the country’s stringent regulatory standards and access to advanced research facilities. Prominent companies in this sector include Panama Pharma and Laboratorios Rigar.

Textiles and Apparel

Panama’s textiles and apparel industry focuses on domestic and export markets. Companies capitalize on the country’s free zones and trade agreements to manufacture high-quality garments and accessories at competitive costs. The Colón Free Zone is a key hub for textile manufacturers.

Key Manufacturing Locations in Panama

Panama City

As the capital and economic heart of the country, Panama City hosts numerous manufacturing companies, particularly those in the high-tech and pharmaceutical sectors. Its proximity to Tocumen International Airport makes it ideal for companies that rely on efficient air freight logistics.

Colón Free Zone

The Colón Free Zone, located near the Atlantic entrance of the Panama Canal, is the largest free trade zone in the Western Hemisphere. This area is a base for various manufacturing activities, including electronics, textiles, and food processing. Companies in the zone benefit from duty-free imports and exports and a suite of tax exemptions.

Panama Pacifico

Panama Pacifico, a mixed-use development located on the former Howard Air Force Base, has become a thriving industrial and commercial zone. It offers state-of-the-art facilities and tailored incentives for manufacturing and logistics companies. Major international firms like Dell and 3M have set up operations here.

David and Chiriquí Province

The western province of Chiriquí, with its abundant agricultural resources, is a hub for food and beverage processing. The city of David serves as a key manufacturing center for companies that produce packaged foods and agricultural products.

Physical Infrastructure Supporting Manufacturing in Panama

Ports and Logistics

Panama’s ports rank among the most advanced in Latin America, with modern container-handling facilities and seamless integration into global shipping networks. Key ports include:

• Port of Balboa (Pacific coast): A significant transshipment hub connecting Asia and the Americas.
• Port of Cristóbal (Atlantic coast): Equipped to handle high volumes of container traffic and bulk cargo.

Energy Supply

Panama’s reliable energy infrastructure is another advantage for manufacturers. The country generates electricity from diverse sources, including hydroelectric, wind, and solar power, ensuring a stable and sustainable energy supply.

Telecommunications

Panama boasts a modern telecommunications network, including widespread internet connectivity and mobile coverage. This infrastructure supports manufacturing companies that rely on digital systems and IoT (Internet of Things) technologies.

Human Capital in Panama

Skilled Workforce

Panama’s labor force is characterized by its high literacy rate and multilingual proficiency, particularly in Spanish and English. The government has invested heavily in education and vocational training programs, ensuring a steady supply of skilled workers for manufacturing industries.

Technical Training Centers

Institutions such as the National Institute for Vocational Training and Training for Human Development (INADEH) offer specialized programs to equip workers with the technical skills needed in manufacturing. These initiatives address the needs of the electronics, pharmaceuticals, and food processing industries.

Government Incentives for Manufacturing in Panama

The Panamanian government has implemented a range of incentives to attract manufacturing companies. These incentives are designed to reduce operational costs and enhance business profitability.

Tax Incentives

• Manufacturers in Panama can benefit from:
• Income tax exemptions for companies operating in free zones.
• Reduced corporate tax rates for export-oriented businesses.
• Exemptions on import duties for raw materials and equipment.

Special Customs Regimes

The country’s special customs regimes simplify procedures for importing and exporting goods. Companies operating in free zones or under specific agreements enjoy expedited customs clearance and reduced tariffs.

Free Zones

Panama’s free zones, such as the Colón Free Zone and Panama Pacifico, offer a range of benefits, including:

• Duty-free import and export of goods.
• 100% exemption from income, property, and dividend taxes.
• Streamlined administrative processes for setting up operations.
• Multinational Headquarters (MHQ) Program

The MHQ program encourages multinational companies to establish regional headquarters in Panama. Participating companies receive significant tax breaks and can hire foreign personnel under favorable visa conditions.

Challenges and Opportunities

Challenges

Despite its many advantages, manufacturing in Panama does face some challenges, including relatively high labor costs compared to other Latin American countries. Additionally, some companies may encounter bureaucratic hurdles when navigating regulatory frameworks.

Opportunities

However, the opportunities outweigh the challenges. Panama’s strategic location, robust infrastructure, and government support position it as a competitive manufacturing destination. The growing emphasis on nearshoring, particularly for North American companies, further enhances Panama’s appeal.

Future Outlook

Panama’s government has outlined ambitious plans to develop its manufacturing sector further. Investments in renewable energy, digital transformation, and infrastructure upgrades are expected to attract more companies to the country. Promoting sustainable manufacturing practices also aligns with global trends and enhances Panama’s competitive edge.

Conclusion

Manufacturing in Panama offers businesses unique strategic advantages, including a prime location, world-class infrastructure, and government incentives. The country’s diverse manufacturing industries, skilled workforce, and supportive regulatory environment make it a top choice for companies seeking to expand their operations in Latin America.

As global supply chains evolve, Panama’s role as a manufacturing hub is poised to grow. Businesses looking to capitalize on the region’s opportunities should consider Panama a key destination for their manufacturing activities.

According to Rob Citrone, founder of Discovery Capital Management, the Argentine economy is undergoing a transformation process that could boost its credit rating and attract billions in investments. These developments underscore the increasing capital flows to Argentina as global investors recognize the country’s potential for sustained growth.

According to Citrone,, Argentina is at a decisive stage in consolidating its economic growth. The fund manager highlighted the possibility of the country achieving investment-grade status during a potential second term of Javier Milei, provided structural reforms are deepened. Citrone emphasized that capital flows to Argentina could be bolstered significantly if reforms are implemented effectively.

“President Milei has a real plan, and if he were reelected and further deepened the reforms significantly, there is a good chance that Argentina could achieve investment grade by the end of 2031,” Citrone stated in an exclusive interview with Bloomberg en Línea. He also noted that Milei could cement “stability in Argentina for years, decades, and generations to come,” creating the ideal environment for increased capital flows to Argentina from both domestic and international investors.

Factors Behind Investment-Grade Status

Investment-grade status, awarded by firms such as Moody’s, S&P, and Fitch, reflects a country’s ability to meet its financial obligations. Its benefits include lower interest rates for debt issuance, greater attraction of foreign investment, and increased economic stability.

Citrone explained that Milei’s reforms aim to improve fiscal solvency, economic growth, and the financial system’s robustness—key factors in obtaining the coveted rating. “I believe his popularity, which is at very high levels, will continue to grow this year, especially with the economy improving: people on the streets will strongly feel the positive momentum in the country,” he stated. Such momentum could further accelerate capital flows to Argentina, positioning it as a leading investment destination in Latin America.

The investor also highlighted significant economic progress in 2024, such as increased exports, the accumulation of $21 million by the Central Bank, and the reduction of inflation and country risk. According to him, Argentina is transitioning from a phase of macroeconomic stabilization to sustained growth, setting the stage for higher capital flows to Argentina.

Optimistic Economic Projections

Citrone projected economic growth of over 6% this year, accompanied by inflation below 19%—figures he described as “phenomenal for the country.” He also anticipated the ruling party’s strong performance in midterm elections, which could facilitate the approval of new structural reforms.

“I believe productivity in Argentina will improve, and there’s a clear focus on achieving this,” said the Discovery founder. Among the structural reforms that could be implemented, he mentioned the possibility of deeper labor reforms to enhance the country’s competitiveness in international markets.

Regarding external debt, Citrone highlighted that Argentine bonds, such as the Global 29 and 30, could continue reducing their yields to around 8%, a significant drop from the previous year’s levels. “It’s hard to find a spread compression like that anywhere else in the world,” he remarked.

The Impact of Foreign Exchange Controls

One of Citrone’s bets is on eliminating foreign exchange controls, which, he argued, could lead to a massive influx of capital flows to Argentina. “It will amount to multiple billions of dollars. $20 billion wouldn’t surprise me,” he said, referring to a combination of foreign direct investment and inflows into financial assets.

The investor noted that the current exchange rate does not hinder the competitiveness of Argentine exports. “Argentina remains competitive at this exchange rate. It’s about reducing costs and increasing productivity. You don’t grow your exports by $27 billion in a year if you have an issue with the exchange rate,” he asserted.

Citrone supported the government’s decision to reduce the pace of the crawling peg from 2% to 1% monthly. “It was an excellent decision, as it will further help reduce inflation and lower inflation expectations,” he said.

Discovery’s Winning Bets in Argentina

Discovery Capital Management’s portfolio in Argentina, representing 60% of its exposure in Latin America, delivered a 52% return in 2024 thanks to strong bets on Argentine assets. Key positions included:

• Grupo Financiero Galicia (GGAL): The fund’s most prominent position, with a 340% increase in 2024. “Galicia is a major beneficiary of macroeconomic stability and the growth we’ll see in credit,” said Citrone, who expects an additional 40% appreciation potential in 2025.
• Vista Energy (VIST): A 79% rise last year.
• YPF (YPF): Up 164%, with further growth prospects in 2025.
• BBVA Argentina (BBAR): Recorded a gain exceeding 400%.
• Adecoagro (AGRO): The only position that ended the year in the red, with a 12% decline. Despite this, Citrone defended the investment, arguing it is “a very low-risk investment with an annual return of 7–10% to shareholders.”

“Galicia is our largest position globally. We believe the growth capacity in credit is enormous, and bank profitability should increase dramatically,” he emphasized.

Regional Perspectives

In contrast to his optimistic view on Argentina, Citrone was cautious about Brazil, where he maintains short positions. “It’s about leadership. And I’m uncomfortable with the leadership I currently see in Brazil,” he said.

The investor predicted a political shift in the neighboring country during the 2026 elections, where he expects a center-right candidate to win. In the meantime, he warned of fiscal risks and a negative impact on economic growth.

On the other hand, Citrone expressed optimism about the United States’ economic prospects and its impact on Latin America. “I believe the U.S. economy will maintain solid growth, which will benefit the Americas and the Western Hemisphere,” he concluded.