ARGENTINA – Manufacturing and construction contracted sequentially in 4Q25

Manufacturing fell sequentially in December. The IPI manufacturing index decreased by 0.1% MoM SA in December, marking the fourth consecutive drop. Thus, industry output fell by 1.5% QoQ SA in 4Q25. On an annual basis, manufacturing fell by 3.9% in December and by 5.2% in 4Q25. All sectors contracted on an annual basis in December, with the exceptions of food, wood and paper and basic metals. In all 2025, manufacturing expanded by 1.6% yoy, after falling 9.4% in 2024.

Construction rebounded in December. The construction index rose by 3.8% MoM SA in December, after falling 3.8% in the previous month. However, construction contracted by 1.2% QoQ SA in 4Q25. On annual basis, construction rose by 2.9% YoY in December and 2.1% in the 4Q25. Thus, construction expanded by 6.3% yoy in 2025, after falling 27.4% in 2024. Employment in the sector increased by 2.9% from November 2024 (figures have a one-month lag). According to a qualitative survey, 65% of those involved in private construction expect no changes in activity levels over the next three months. Meanwhile, 22% expect an increase and 13% anticipate a decline. Among companies primarily engaged in public works, 21% anticipate a decrease in activity levels during the next three months, while 60% expect no change and 19% expect an increase.

Our take: We see downside risks to our 4.5% GDP growth forecast for 2025 given weaker construction and manufacturing data in 4Q25. The monthly GDP proxy for December will be published on February 24. We expect 3.5% GDP growth in 2026, driven by lower interest rates and a more favorable investment outlook.