Argentina Economic Activity Falls 2.9% in July, Worst Month Since 2020

ARGENTINA · ECONOMY

Argentina economic activity slumped in July, wiping out June’s gain and putting a technical recession within sight.

Argentina’s economy shrank sharply in July, official data showed on Thursday. Argentina economic activity fell 2.9% from June after seasonal adjustment, statistics agency INDEC said.

Compared with July 2025, activity was down 1.4%. That was far worse than expected: analysts polled by Reuters had forecast 1.8% annual growth.

Argentina Economic Activity: How Big a Fall

Leaving out the lockdown months of March and April 2020, it was the worst month since September 2019, Ámbito reported. Banco Provincia called it the fourth-largest monthly drop since 2004, outside the pandemic.

The bank said such falls were “only comparable to devaluations and the international crisis of 2008”. INDEC’s smoother trend measure, by contrast, still rose 0.2%.

The July slump more than erased June’s gain, which INDEC revised down to 0.3% from an initial 0.8%. The index fell to its lowest level since March 2025, 4.1% below December, Cohen analyst Justina Gedikian said.

Activity has fallen in four of the first seven months of 2026. Economists such as Facundo Beltramone of Fundación Libertad call it a “serrucho”, a saw-tooth economy that alternates up and down.

A Saw-Tooth Year in Numbers

INDEC’s revised series shows the path. Activity was flat in January, fell 2.2% in February and rebounded 2.7% in March.

It then fell 1.4% in April and 0.6% in May, before rising 0.3% in June. July’s 2.9% drop was the largest of the year.

The quarterly data show the same swings. GDP grew 0.7% in the first quarter and shrank 0.6% in the second, though it was still 2.0% above a year earlier.

Which Sectors Fell

Eight of 15 sectors shrank from a year earlier. Commerce fell 5.1% and manufacturing 4.6%, together taking 1.3 points off the annual figure.

Construction fell 3.3% and financial services 3.0%. Earlier sector data had shown factory output down 5.0% and building activity down 4.6% from June.

Mining and oil rose 8.4%, and farming edged up 0.7%. Fishing, a small and volatile sector, jumped more than fivefold.

Those gains added about 1 point, not enough to offset the rest. Gedikian said the economy has no engine of its own beyond primary sectors like mining and farming.

Why the Economy Stalled

Gonzalo Carrera of the consultancy Equilibra told Ámbito the data were worse than expected. He blamed a cheap dollar that hurts local producers, real wages that are not rising and credit that has not recovered.

Farming had also stopped growing, he said. One-off factors, such as the football World Cup in June and July, may have played a smaller role.

Economy Minister Luis Caputo stressed the 1.7% growth so far this year and pointed to temporary shocks. He named gas shortages for industry, heavy rain and snow, and fewer hours worked during the World Cup.

The government is betting on construction. In August, Caputo announced easier dollar loans for companies and state pension-fund money to help banks offer mortgages.

He told a 26 August press conference: “We are attacking both supply and demand.” Developers would get cheaper dollar financing, he said, while mortgages would lift demand.

Is a Recession Coming?

A technical recession means two quarters of decline in a row. The economy already shrank 0.6% in the second quarter from the first, INDEC’s GDP data show.

Consultancy LCG estimates that August and September would each need growth of about 3% to avoid a second falling quarter. Carrera said even a full August rebound would not be enough if September grows less than 2%.

Ammiel Pardo of the consultancy Aldazabal expects a better August, helped by the low July base. Milei, speaking in New York, said the economy would grow about 3% this year, “perhaps a little less”.

Economists surveyed by the central bank cut their 2026 forecast to 2.1% in August, from 3.5% in December, Bloomberg reported.

Why It Matters If You Live or Invest in Argentina

For people living in Argentina, the slump is concentrated where most jobs are. Commerce and manufacturing, the two heaviest-weighted sectors in the index, are falling fastest.

Very weak July figures took the economy nearly back to where it was when Milei took office, Bloomberg Economics’ Jimena Zúñiga said. Investors, she added, are likely to worry about his 2027 re-election prospects.

Gedikian said the lag in the most job-intensive sectors leaves less room to lift the public mood. That matters as the 2027 campaign comes into view.

For investors, weak growth adds to other worries: country risk has risen for days and central bank reserves are falling. On the same day, the Senate passed Milei’s central bank reform, a boost for his agenda.

What Comes Next

INDEC publishes the August estimate on 21 October and September’s on 24 November. Those figures will show whether the saw-tooth pattern returns or July marks a deeper turn.

Third-quarter GDP figures, which will settle the recession question, are due on 16 December. Before then, monthly data on factory output and construction will give earlier clues.

Sources: Infobae, INDEC activity data and analysts, 24 September 2026; Catamarca Actual, republishing Ámbito, 24 September 2026; Buenos Aires Times (Bloomberg), Milei in New York, 24 September 2026; La Nación, INDEC annual change, 24 September 2026.

Frequently Asked Questions

How much did Argentina’s economy shrink in July?

Activity fell 2.9% from June after seasonal adjustment, INDEC said. Compared with July 2025, it was down 1.4%.

Is Argentina in recession?

Not yet by the technical definition of two falling quarters. The second quarter shrank 0.6%, and economists say August and September must grow about 3% a month to avoid a second fall.

Which sectors fell the most?

Commerce fell 5.1% and manufacturing 4.6% from a year earlier. Construction fell 3.3%, while mining and farming grew.

What does the government say?

Economy Minister Luis Caputo pointed to 1.7% growth so far this year and blamed temporary shocks. He named gas shortages, bad weather and the football World Cup.

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