Economic activity posts biggest slump since 2023

Argentina’s economy contracted sharply in February, posting its biggest monthly decline since 2023, as retail and manufacturing continue to struggle.

Economic activity fell 2.6 percent from January, well below the 0.5 percent drop estimated by Bloomberg Economics, according to government data published Wednesday. From a year ago, the gross domestic product proxy fell 2.1 percent, far below the 0.5 percent median estimate of economists surveyed by Bloomberg. Argentina grew 0.4 percent on the month in January.

Economy Minister Luis Caputo said earlier this month in Rosario that the country’s economy will post growth in April while monthly inflation will slow as well. March tax collection data already shows that economic activity has started to rebound, President Javier Milei said at an event last week.

In March, the trade balance delivered a US$2.5 billion surplus, “the highest for the month since 1990 and a clear sign of economic momentum,” according to a Wednesday JPMorgan note. The first quarter delivered a US$5.3-billion surplus on an export surge, a sharp uptick from US$1 billion a year ago, the note said. Exports on the month in March turned around sharply from a 14.5 percent drop in February to a 19.8 percent surge, according to the INDEC national statistics bureau.

Monthly inflation, which Milei vowed to slow below one percent this year, picked up to 3.4 percent in March and hasn’t slowed in 10 months. It’s still a significant improvement from the crisis Milei inherited, but his disinflation campaign has lost momentum.

“Very weak Argentine activity in February tempered the optimism raised by robust gains in December and January. Yet early indicators for March suggest another bounce is in store. We still see the economy expanding solidly this year, even if at more moderate pace than our expectation after the October midterms," said Jimena Zuñiga, Argentina economist for Bloomberg Economics.

Milei asked Argentines earlier this month to be patient with the country’s economic turnaround, employing a rare tone of humility amid declining poll numbers and a worsening outlook for blue-collar industries.

His approval rating last month hit its lowest since he took office in falling to 36 percent, according to LatAm Pulse, a survey conducted by AtlasIntel for Bloomberg News.

“We know that the last months were hard,” he wrote on X. “That’s why we’re asking for patience. This is the right path. Changing it would be to blow up what’s been achieved.”

Economists in Argentina revised down their 2026 growth estimates to 3.3 percent while marking up inflation estimates for the year to 29 percent, according to the Central Bank’s March survey.