MediumIV Macro Policy & Sovereign Debt17 September 2026, Thursday
Argentina's economy contracted 0.6% in the second quarter and unemployment hit 7.9%, the highest since 2021
Data released by INDEC on 17 September showed the first quarterly contraction since 2024; exports alone carried growth, while consumption and investment fell back.
According to data published by Argentina's statistics institute INDEC on 17 September 2026, the economy contracted 0.6% in the April-June period compared with the previous quarter. As the Buenos Aires Times reported, this is the first quarterly contraction recorded since 2024; even so, the result came in better than the median expectation of −0.9% in the analyst survey compiled by Bloomberg. In annual terms the economy grew 2.0%; as FX.co reported, that rate was down from 2.3% in the first quarter. The only item that carried growth within the quarter was exports, with the decline in imports also contributing; by contrast, public spending, household consumption and fixed capital formation all fell on the quarter.
On the labour side the picture is weaker. According to data released the same day, the unemployment rate rose to 7.9% in the second quarter; that means an increase of 0.1 points on the first quarter and 0.3 points on the same quarter of last year, and according to the Buenos Aires Times it is the highest level since 2021. The share of the economically active population rose by 0.8 points year on year to 48.9%, while the employment rate stood at 45%. Informality is deepening too: informal employment rose by 1 point from a year earlier, and within that group the share of the self-employed rose from 34.3% to 37.3%. In the interior urban centres unemployment stands at 7.6% and underemployment at 9.1%, and both showed statistically significant increases of 1.3 and 0.9 points respectively. The government cut its 2026 growth forecast from 5% to 3%; the economists' expectation in the central bank survey, meanwhile, fell from 3.5% in December to 2.1%. The Buenos Aires Times reported that the sectors that create the most jobs, such as manufacturing, retail and construction, have been hurt by the appreciation of the currency and rising global competition, while the record-setting energy, mining and agriculture sectors employ far fewer people.
Talay assessment
Bottom line
Argentina's disinflation programme has changed the composition of the economy: energy, mining and agriculture are setting records while manufacturing, retail and construction, the biggest job creators, are contracting. The 0.6% quarterly contraction and 7.9% unemployment show the social cost of that divergence. The most likely path is a weak, export-led recovery alongside continuing pressure in the labour market.
Likely effects
- Argentine labour marketNegative1–6 months
The rise in the share of the self-employed within informal employment from 34.3% to 37.3% shows that job losses are not fully reflected in the official unemployment rate. The real loss of income may be more widespread than the 7.9% figure suggests.
- Political balance, reform timetableNegative1–6 months
The government cutting its own growth forecast from 5% to 3% still leaves it far above economists' expectation of 2.1%. Downward revisions to expectations risk eroding public support for the economic programme.
- Commodity-exporting countriesUncertain1–6 months
The fact that exports alone carried Argentine growth suggests that agricultural and energy supply will keep increasing. That implies a downward, if limited, effect on global grain and energy prices.
Possibilities, ranked
- 1Weak export-led recovery55%
Energy and agricultural exports continue to rise, the economy grows slightly in the third quarter but unemployment stays around 7.9%.
Watch: The export contribution and the direction of household consumption in third-quarter GDP data, and the monthly economic activity index.
- 2The contraction extends into a second quarter30%
The decline in consumption and investment persists, and two consecutive contracting quarters open a debate about technical recession.
Watch: Quarterly GDP turning negative again in the third quarter and unemployment rising above 8%.
- 3A stronger recovery than expected15%
Domestic demand revives, the government's 3% forecast comes within reach and unemployment falls back.
Watch: The 2026 growth expectation in the central bank survey being revised up from 2.1%.
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Argentine GDP (quarterly)▼ −0.6%
- Argentine unemployment rate▼ 7.9%
- Government 2026 growth forecast▼ 3%