BUENOS AIRES — At a family-owned factory in Buenos Aires, a machine used to wrap packets of coloured socks sits silent. Since President Javier Milei took office nearly three years ago, sales have fallen around 40%, battered by weak consumer demand and competition from cheaper imports as the government lifted trade restrictions, Reuters reported on Monday.

Source: Reuters

Economists say the economy likely slipped into recession in the third quarter, a test of voter patience a year ahead of the October 2027 presidential election, when Milei is widely expected to run for a second term, Reuters said.

-0.6%GDP change in the second quarter from the first, according to Analytica
-1.5%Analytica's forecast contraction for the third quarter, which would confirm a technical recession
32,300Businesses closed from Milei taking power in December 2023 through July — roughly 6% of all companies, according to think-tank Fundar
36%Milei's approval rating in October, with disapproval at 56%, in a Giacobbe y Asociados survey

"Argentina's economy is technically in a moderate recession," said Ricardo Delgado, head of consultancy Analytica, in comments reported by Reuters. Economic activity is forecast to have contracted for a second consecutive quarter in the July-September period, meeting the common definition of a recession; official data for the quarter will be released later in November.

Independent tracking pointed the same way weeks earlier. Bloomberg Economics, summarising August activity data, said the economy was almost 3% below its second-quarter level with two months of third-quarter data in hand, putting it on track for a quarterly contraction consistent with a technical recession, after monthly activity rose only 0.1% in August and fell 1.7% from a year earlier.

Source: Bloomberg Economics via Briefs.co

Austerity's trade-off: inflation down, households squeezed

Milei's radical austerity measures have slowed inflation to 30% from a sky-high 200% and brought other macroeconomic imbalances under control, Reuters said, but their benefits have yet to reach much of the broader public. In the first nine months of the year consumption fell 2.7% compared with the same period in 2025, according to market research firm Scentia, which tracks sales across supermarkets, small retailers and e-commerce platforms.

Delgado said he expected a two-track economy to continue with 'ups and downs' in 2027, warning that household finances were unlikely to improve meaningfully before the election, Reuters reported. A slight rebound is forecast in 2027. Milei has ruled out changes to his economic plan, dismissing as 'colossal stupidity' claims that people were unable to make ends meet.