Will Spanish FDI in Argentina be a flight or a stay?

The shock therapy economic program implemented by President Javier Milei in Argentina was aimed at attracting foreign investment, with Spain being a major player in FDI for the country. Despite the historically strong economic relationship between Spain and Argentina, recent data has shown a decline in Spanish FDI flows to Argentina, with a significant decrease since 2020. Argentina's current macroeconomic adjustments, including fiscal consolidation have had a negative impact on the economy, with GDP growth declining and poverty rates rising. While some Spanish companies may consider repatriating profits once capital controls are lifted, the majority may delay any action to reduce their exposure to Argentina until after the upcoming mid-term elections in late 2025. If President Milei's party and its allies fail to win a majority in the elections, Spanish companies may decide to leave, given the cautious approach they have taken following past economic and political uncertainties.