In Argentina, uncertainty is growing over President Javier Milei's reelection prospects and policy continuity, delaying corporations' investment decisions. Centered on the energy and mining sectors, moves are emerging to postpone new projects or pivot to overseas investments.
According to the local outlet Perfil on the 24th (local time), Argentina's business community and foreign investors view the potential for a change in power, social unrest, and possible shifts in economic policy as key variables in their investment decisions. Some analyses say corporations are tracking polls and election outlooks more sensitively than market conditions.
The chill in investor sentiment is also evident in Vaca Muerta, a global shale gas and oil development site. Since the launch of the Milei administration, Argentina has sought to attract foreign capital with the large-scale investment incentive regime RIGI, but most of those actually using the benefits are corporations already operating in Argentina, critics say. The hoped-for inflow of new foreign capital has been limited.
Moves by Brazilian corporations are cited as a representative case. Last year, several Brazilian corporations visited Argentina multiple times while reviewing participation in the Neuquén Basin development, but many projects have recently been effectively put on hold.
A representative of a multinational corporation told Perfil, "Investment decisions have changed after the drop in support for the Milei administration," adding, "There's a mood of delaying long-term investment decisions due to the possibility of a change in government and concerns about social unrest." The person added, "For multibillion-dollar investments with a horizon of more than 10 years, many are deciding to watch the situation for another one to two years."
Investment deferrals are not limited to foreign corporations. Among Argentine domestic corporations, there are cases of halting new projects or shifting investment to overseas operations. In the business community, there is an assessment that falling support for the government and internal conflicts within the ruling liberal camp are directly affecting corporate sentiment.
What corporations fear most is policy reversal. If power changes hands, foreign exchange controls, export restrictions, and price controls could be reintroduced. Some multinational corporations are reportedly responding by increasing overseas borrowing structures to prepare for the possible return of foreign exchange controls.
The Argentine government maintains that uncertainty will diminish as the election nears and that President Milei will win reelection. However, the local business community sees rising unemployment and spreading social unrest as potential key variables in the upcoming vote.