Argentina's GDP falls 0.6% in the second quarter

Argentina's gross domestic product contracted 0.6% in the second quarter compared to the prior three months. The print marks the first quarterly contraction in two years. Year over year, economic output expanded 2%, supported by higher energy and farm exports alongside lower imports.

Private consumption dropped 2.4% during the second quarter amid slow wage growth and tight credit. Economy Minister Luis Caputo stated that 13 of 16 sectors recorded growth in the first half of the year. However, retail, construction, and manufacturing continue to shed jobs, while registered private salaried employment has fallen by roughly 246,300 positions since shortly before the current administration took office, alongside a net loss of over 30,000 businesses.

Annual inflation slowed to 34% last month, down from over 200% when President Javier Milei took office, while consumer prices rose 21% in the period through August. The currency depreciated 3.7% against the dollar over the same period, supported by official bond and futures market interventions and corporate currency controls. Fernando Marull, partner at consulting firm FM&A, projects a potential second straight quarterly decline in the third quarter, which would meet the criteria for a technical recession.

The government lowered its 2026 economic growth forecast from 5% to 3%, while analysts surveyed by the central bank project growth closer to 2%. Osvaldo Giordano, president of the IERAL economic institute at Fundación Mediterránea, expects output to remain largely flat in the third quarter.