On the world stage, Argentina is perhaps best known for three things, all beginning with the letter “M”: Lionel Messi, the world’s best footballer; mismanagement – Argentina is unique in its radical reversal from the advanced economic development it apparently achieved in the early 20th century; and Malbec, the Bordeaux grape that is celebrated as Argentina’s most distinctive wine varietal.
This report – the first in a series on Latin America’s regions – is about a fourth “M”: the region of Mendoza. Abutting the Andes, this desert state is a microcosm of Argentina’s potential, and in 2025, that potential is finally being realized as the country experiences its strongest economic recovery in years.
Argentina’s Economic Turnaround
The context has changed dramatically since President Javier Milei took office. Argentina’s economy grew 5.8% year-on-year in Q1 2025, marking a robust recovery after six consecutive quarters of contraction. International organisations project continued strong growth, with the IMF forecasting 5.5% GDP growth for 2025, while the OECD expects 5.2% growth in 2025 and 4.3% in 2026.
Most significantly, the removal of currency and capital controls in April 2025 has eliminated one of Argentina’s most persistent economic distortions. Annual inflation, while still elevated, has dropped to a projected 30% for 2025 – a substantial improvement from previous years. The exchange rate gap has closed, and positive real interest rates are supporting economic activity.
Mendoza: Leading Argentina’s Renaissance
There is its wine, of course, because Mendoza forms the centre of Argentina’s centuries-long wine tradition that has been upgraded with Zen-like attention to oenological detail to earn its vineyards, such as Bodega Catena Zapata and Mendel Wines, a global profile. The 2025 harvest has been particularly noteworthy, with emerging regions consolidating their reputation and Argentine wines gaining renewed international recognition through events like the inaugural IWC Wine Industry Awards Argentina in September 2025.
No self-respecting Argentine – or for that matter European or Californian – millionaire with more than a passing interest in wine does not also want to own at least a few hectares in the wine lands of the Uco valley. The industry continues evolving, with 2025 trends including lower-alcohol wines and innovative products as wineries adapt to changing consumer preferences.
But it is not only wine and its largest exporting companies, such as Peñaflor, the eighth largest wine company in the world, that give Mendoza a certain cosmopolitan air.
Beyond Wine: Energy and Mining Boom
There is also Roberto Zaldívar, one of the world’s leading ophthalmologists, who practises out of his Mendocino clinic; Grupo Uno, Argentina’s second-largest media company; and large mineral and energy deposits, from uranium, potash, and copper, to gas and oil.
“Mendoza produces a fifth of Argentina’s oil,” says Miguel Galuccio, chief executive of YPF, the national oil company. With the development of the vast Vaca Muerta shale gas formation set to push ahead over the next few years, it will soon account for an even larger share.
Governor Alfredo Cornejo emphasised in March 2025 that “agriculture alone is not enough to sustain the country’s growth”. The province is aggressively developing its mining sector, with 38 exploration projects approved for various minerals, primarily copper. Iron mining has already entered initial exploitation stages, and a potassium pilot plant is operational with plans to scale up to full production.
The province is also investing heavily in infrastructure, developing high-voltage transmission lines and energy infrastructure using its own resources, including a completed transmission line in Cruz de Piedra and five additional projects underway.
The Desert Work Ethic Pays Off
Most distinctive of all, however, is the state’s work ethic, which Charles Darwin missed when he visited and wrote that “the happy doom of the Mendocinos is to eat, sleep and be idle”. But Darwin visited almost 180 years ago, and in the summer, when temperatures can top 40 degrees and a siesta is almost obligatory.
Mendoza’s celebrated work ethic derives partly from its proximity to Chile – Santiago, the capital, is only 360km away, while Buenos Aires is 1,200km distant. But most of it comes from the area’s desert roots – Mendoza’s original name, cuyo, means “sandy land”.
The area’s first known inhabitants, the Huarpes, cultivated corn, beans, squash and quinoa using a system of irrigation that carefully rationed run-off from Andean snow melt. This system was built on and expanded by the Incas, and then by the Spanish conquistadores.
Although the irrigation system, which remains today, allowed farmers to cultivate more land than they otherwise could, its most important and lasting contribution is cultural. To function, it requires a degree of cooperation, responsibility, and adherence to rules that Mendocinos boast are less present elsewhere in the country.
It is no accident that Mendoza is the only Argentine state never to default on its debt or that local politics – a model of convivencia – lacks the malice and vitriol of Buenos Aires.
“Argentina is about bonanza, Chile is about effort. And Mendoza? It is about the desert,” says José Octavio Bordón, a former Mendoza governor. He adds, “Everything grown or produced in Mendoza is solely because of the effort of man. You can’t just throw seeds onto the soil and expect them to grow. Here, you must work.”
International Investment Surge
Foreign companies have noticed Mendoza’s business-friendly attitude and attractive macroeconomic conditions, which have improved dramatically under the current economic program. Its annual economic output is $16bn, it has low unemployment, a shrinking budget deficit and less dependence on national revenues to fund state expenses than many peers.
The 6th Business & Investment Forum held in March 2025 brought together more than 800 participants, with the presence of Economy Minister Luis Caputo highlighting national government alignment with provincial business initiatives. The forum’s Innova Invest initiative successfully connected local entrepreneurs with investment funds and accelerators.
Incomers include Danone, the French food and drink group, to bottle spring water; Saint-Gobain to make glass; Knauf, the German building company, to quarry stone and gypsum; and Globe Speciality Metals of the US, which makes speciality wire.
Argentina’s import tariffs and non-tariff trade barriers were reduced in 2024, with further reductions expected in 2025, making the business environment even more attractive for international companies.
Companies are also drawn to the state’s eight universities and its strategic location, next to the switchback Cristo Redentor road, the busiest mountain pass between Argentina and Chile. There is also the prospect of a 120km train tunnel to link the two countries.
If that project gets built, rail-borne Chilean trade to the Atlantic, and Brazilian and Argentine cargo to the Pacific, would soar and make Mendoza a hub for the wider region.
A New Chapter Begins
Wine exporters, who previously bemoaned the loss of competitiveness from the country’s high inflation, are seeing those disadvantages rapidly disappear as Argentina recovers under Milei’s business-friendly government. The prospect of sustained change has already sparked greater international business interest. “I’ve had more enquiries in the past few months than in years,” regional consultants report.
The World Bank has positioned Argentina to lead Latin America in economic growth, while the country’s strong recovery is expected to continue through 2026. With fiscal discipline sustained and a primary surplus of 1.6% of GDP projected for 2025, the macroeconomic foundation appears solid.
Watching the sun set behind the snow-capped Andes with a glass of wine in hand, those prosperous times that once seemed far away are now arriving. The desert that taught Mendocinos the value of hard work is finally yielding its rewards in an Argentina that has rediscovered the path to growth and stability.
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