Argentina's economy contracted in second quarter, official data shows

Argentina’s economy contracted 0.6 percent in the second quarter compared with the first three months of the year, driven by declines in consumption and investment, according to government data released Thursday.

On an annual basis, however, the trend remained positive, with the economy growing two percent, said a report from the INDEC national statistics bureau.

The figure is broadly in line with the government’s target of three percent growth for the full year in 2026.

The second quarter saw sharp declines in private consumption, which fell 2.4 percent from the previous quarter, while public-sector consumption dropped 2.3 percent. Investment fell 0.8 percent over the same period.

Meanwhile, unemployment rose to 7.9 percent – its highest level since 2021. Informal employment also increased and now accounts for 45 percent of the economically active population.

For President Javier Milei, the rise in informal employment is linked to the “uncertainty” businesses face over the country’s political direction, with presidential elections just over a year away.

“If there is uncertainty over whether the process [of reforms] is permanent or not, they will not make permanent decisions; they will not go out and hire workers permanently,” Milei argued two weeks ago in a speech to business executives.