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

Argentina's economy contracted by 0.6 percent in the second quarter, driven by declines in consumption and investment, according to government data released on Thursday. Despite the contraction on a quarterly basis, the annual trend remained positive, with the economy expanding by 2 percent, as reported by the INDEC national statistics bureau. This figure aligns closely with the government's target of 3 percent growth for the full year of 2026.

The second quarter witnessed significant declines in both private and public consumption. Private consumption dropped by 2.4 percent from the previous quarter, while public-sector consumption fell by 2.3 percent. Investment also decreased by 0.8 percent over the same period.

Unemployment rose to 7.9 percent, marking its highest level since 2021. Informal employment, which now accounts for 45 percent of the economically active population, also increased. President Javier Milei attributes this rise to the "uncertainty" businesses face regarding the country's political direction, given the presidential elections are just over a year away.

Milei argued in a speech to business executives that uncertainty about the permanence of the reform process prevents businesses from making long-term decisions, such as hiring workers permanently. Milei, who is seeking re-election in 2027, emphasized that this uncertainty hinders economic growth and stability.