Argentina's economy likely shrank again in the third quarter, economists say

Weak sales and cheaper imports are squeezing jobs and incomes, Reuters reported.

Economists see a second quarterly contraction

Gross domestic product fell 0.6% in the second quarter from the first, Reuters reported. That followed a 2.9% monthly drop in economic activity in July. INDEC reported the July figure.

Ricardo Delgado, head of consultancy Analytica, forecasts a further contraction of around 1.5% in July to September. Two consecutive quarterly declines would meet the common definition of a recession. "Argentina's economy is technically in a moderate recession," Delgado said.

Consumption is the weak link

Household consumption accounts for about two-thirds of GDP. Market research firm Scentia says consumption fell 2.7% in the first nine months of 2026 from the same period in 2025.

At Eseka, a family-owned sock and underwear maker in Buenos Aires, sales have fallen around 40% since Milei took office in December 2023. The firm still produces nearly 3 million items a month, including underwear and swimwear for its Cocot and Dufour brands. It posted losses last year and cut about 30% of its workforce, according to its owners. Over half the circular knitting machines in the sock factory stand idle. "The situation is critical," said Ricardo Kuchikian, who owns Eseka with his brother Gustavo. "Consumption has fallen very sharply over the past three years," he said.

Closures and cheaper imports hit local industry

Think tank Fundar counts some 32,300 business closures between December 2023 and July 2026. That is roughly 6% of all companies in Argentina.

Fabric distributor Dakuba estimates sales have fallen 40% since the end of 2023. Its director, Martin Abigador, blames aggressive competition from imports, mainly from China. Official figures point the same way. INDEC reported that in August manufacturing fell 3.2% from a year earlier. In the same month, retail and wholesale trade dropped 3.5%, and construction slid 2.5%, INDEC reported. Energy, mining and agriculture remain among the few sectors recording growth, helped by exports and investment in shale oil, gas and lithium. That strength has not offset the slump in textiles, auto manufacturing, retail and construction.

Inflation is down, poverty is up

Austerity has slowed inflation to 30% from about 200%.

INDEC reported on 24 September that the poverty rate rose to 32.3% in the first half of 2026 from 28.2% in the second half of 2025. Extreme poverty rose to 7.5% from 6.3%. INDEC surveyed 31 urban areas. Roughly 9.7 million people across them were living below the poverty line, including 2.25 million in extreme poverty. The Catholic University of Argentina estimates the rate could reach 35% by year-end. Economy Minister Luis Caputo wrote on social media that both rates remain sharply lower than in the first half of 2024.

A survey by consultancy Giacobbe y Asociados put Milei's approval at 36% in October. It put disapproval at 56%. A September AtlasIntel survey found disapproval among lower-income respondents had climbed to nearly 70%. The survey defined lower-income respondents as those earning up to around $650 a month.

What happens next

Official third-quarter GDP data is due in November. Economists forecast a slight rebound in 2027. Milei is widely expected to run for a second term in the October 2027 election. Until then, the government insists it will not change course.