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Argentina Economy Shrinks Amid Austerity
23 Apr
Summary
- Economy contracted 2.6% in February, largest monthly drop under Milei.
- Manufacturing and retail sectors saw significant declines.
- Export sectors like mining and agriculture showed growth.
Argentina's economic activity declined by 2.6% in February compared to January, marking the most significant monthly contraction since President Javier Milei assumed office in late 2023. This reduction in economic output follows a 2.1% year-on-year drop, indicating that Milei's austerity measures are impacting major industries.
While investors have reacted positively to falling inflation and increased foreign exchange reserves, domestic industries like manufacturing and retail have struggled. These sectors faced an 8.7% and 7% contraction respectively, exacerbated by reduced tariffs allowing increased import competition.
In contrast, export-driven sectors such as mining and agriculture have shown resilience, with activity increasing by 9.9% and 8.4% in February year-on-year. This uneven recovery highlights a divergence within the Argentine economy.
The unemployment rate also rose to 7.5% in the last quarter of 2025, the highest fourth-quarter figure since the pandemic, reflecting broader economic pressures despite efforts to stabilize the economy.
