Argentina Slips Into Recession

Argentina's economy has likely slipped into a recession in the third quarter, posing a significant challenge for President Javier Milei ahead of the 2027 presidential election. The country's household consumption, which accounts for about two-thirds of its gross domestic product, has been severely impacted, with sales falling around 40% for many local businesses, including Eseka, since President Milei took office nearly three years ago.

The economic downturn has resulted in widespread business closures, with some 32,300 businesses, roughly 6% of the total companies in Argentina, shutting down between December 2023 and July. This has had a devastating impact on the population, with the share of Argentines living beneath the poverty line rising to nearly a third of the population.

Despite the challenges, President Milei's radical austerity measures have slowed inflation to 30% from 200%. However, the measures have also led to a decline in consumption, with a 2.7% fall in the first nine months of the year compared to the same period in 2025.

## Why it matters The recession in Argentina has significant implications for the country's economy and its people. With economic activity forecast to have contracted for a second consecutive quarter in the July-September period, the road to recovery will be long and challenging. The situation is critical, with many businesses struggling to stay afloat, and the population feeling the pinch of poverty and reduced consumption.

## What happens next Economists forecast a slight rebound in 2027, but the outlook remains uncertain. President Milei is widely expected to run for a second term in the October 2027 presidential election, and the state of the economy will likely be a key factor in the vote. As the country navigates this difficult period, the government will need to balance the need for austerity with the need to support businesses and households, to prevent further economic decline and social unrest.

The situation in Argentina serves as a reminder of the challenges faced by economies around the world, where austerity measures can have far-reaching consequences for businesses and individuals. As the country looks to the future, it remains to be seen whether the government's policies will be enough to stimulate economic growth and improve the lives of its citizens.