In February, Argentina’s economy experienced a significant contraction, marking its largest monthly decline since 2023, as both retail and manufacturing sectors face ongoing challenges. Economic activity declined by 2.6 percent from January, significantly underperforming the 0.5 percent decrease projected by source, as reported in government data released on Wednesday. The gross domestic product proxy experienced a decline of 2.1 percent compared to a year ago, significantly underperforming the median estimate of 0.5 percent from economists. In January, Argentina experienced a month-on-month growth of 0.4 percent.
Economy Minister Luis Caputo stated earlier this month in Rosario that the nation’s economy is expected to experience growth in April, alongside a deceleration in monthly inflation. President Javier Milei stated at an event last week that March tax collection data indicates a rebound in economic activity. In March, the trade balance recorded a surplus of US$2.5 billion, “the highest for the month since 1990 and a clear sign of economic momentum,” according to a Wednesday JPMorgan note. The first quarter recorded a surplus of US$5.3 billion, driven by a significant increase in exports, marking a notable rise from US$1 billion in the same period last year, according to the report. In March, exports experienced a significant rebound, rising by 19.8 percent after a notable decline of 14.5 percent in February, as reported.
In March, monthly inflation, which Milei pledged to reduce to below one percent this year, increased to 3.4 percent and has remained elevated for the past 10 months. While it represents a notable advancement from the crisis that Milei took over, the momentum of his disinflation efforts has diminished. “The lackluster Argentine activity in February has moderated the optimism generated by the strong gains observed in December and January.” However, preliminary signals for March indicate that another rebound may be forthcoming. “We still see the economy expanding solidly this year, even if at a more moderate pace than our expectation after the October midterms,” said Jimena Zuñiga. Milei urged Argentines earlier this month to exercise patience regarding the nation’s economic recovery, adopting an uncommon tone of humility in light of declining poll numbers and a deteriorating outlook for blue-collar sectors.
Last month, his approval rating reached its lowest point since taking office, declining to 36 percent, as reported by LatAm Pulse, a survey conducted. “We recognize that the recent months have been challenging,” he stated on X. “That is the reason we are requesting patience.” This represents the appropriate trajectory. Altering it would undermine the accomplishments that have been realized. In Argentina, economists have adjusted their 2026 growth projections to 3.3 percent, concurrently increasing inflation forecasts for the year to 29 percent, as reported in the Central Bank’s March survey.