Argentina posts sharpest monthly contraction under Milei
Source · Economy desk
— Summary
Argentina's economy shrank 2.6% in February compared to January, the steepest monthly contraction since Javier Milei took office in late 2023, according to the national statistics agency's proxy for GDP. On a year-on-year basis, activity fell 2.1%, the largest drop since 2024, breaking a spell of optimism that followed 4.4% full-year growth in 2025.
The downturn exposes the cost of Milei's tight monetary policy and austerity programme: unemployment hit 7.5% in Q4 2025, up 1.1 percentage points on a year earlier, the highest fourth-quarter reading since Covid. Manufacturing and retail — hammered by tariff cuts and import competition — shrank 8.7% and 7% year-on-year, while mining (+9.9%) and agriculture (+8.4%) surged. Milei's approval rating slid to 36% in March (AtlasIntel), the lowest of his presidency.
Investors still cheer falling inflation, relaxed currency controls and rebuilt FX reserves, but StoneX strategist Ramiro Blazquez Giomi warns the government will need to "give some air" to struggling industries before Milei's 2027 re-election bid. Milei wants to tilt the economy from manufacturing toward mining, energy, agriculture and tech — today only 12% of employment. Source: Financial Times, 22 April 2026, Ciara Nugent.
The story in one line. A 2.6% month-on-month drop is the biggest since Milei took office, showing his inflation cure is still biting industries that employ most Argentines.
Key numbers
–2.6% month-on-month economic activity in February (proxy for GDP)
–2.1% year-on-year, largest decline since 2024
+4.4% full-year GDP growth in 2025 — broken by this print
7.5% Q4 2025 unemployment, +1.1 pp vs. Q4 2024
–8.7% manufacturing, –7% retail (year-on-year)
+9.9% mining, +8.4% agriculture (year-on-year)
36% Milei approval rating in March (AtlasIntel), lowest of his presidency
12% of employment in mining, energy, agriculture and tech combined
Why it matters
Milei’s stabilisation story — falling inflation, freed capital controls, rebuilt reserves — has worked for markets but not yet for the sectors that actually employ most Argentines. Argentina’s recovery has become lopsided: export-focused commodity industries boom while manufacturing and retail, exposed to import competition since tariff cuts, collapse. With the 2027 presidential election on the horizon, the political question is whether disinflation alone buys re-election or whether the government needs to pivot and cushion domestic industry.
Takeaway
For investors, Argentina still clears the macro-stabilisation bar. For voters, the macro headlines mask a recession in the sectors they live in. Something has to give before 2027, and the political path of least resistance is targeted support rather than a wholesale reversal.
Source: Financial Times, 22 April 2026, Ciara Nugent.