Argentina’s economy is at an unusual juncture. Unlike many other periods in the country’s recent history, the volatility of the U.S. dollar — long the country’s main economic obsession — is no longer at the center of the debate.
Inflation isn’t either. Although it remains high compared to the rest of the region—coming in at 1.9% in June—it has shown signs in recent months of resuming its downward trajectory.
That does not mean, however, that President Javier Milei’s economic model is free from criticism.
Instead, criticism has shifted toward the sectors most closely tied to domestic consumption: manufacturing, construction, and retail. These are also among the country’s largest employers.
The real economy, Milei’s biggest casualty
Not every part of the real economy is struggling. The oil and gas sector is experiencing a boom, driven by the sharp increase in production at Vaca Muerta.
Other labor-intensive sectors, however, have been hit hard. These include retail, construction, and manufacturing — with manufacturing perhaps the biggest casualty of the administration’s economic model.
Between November 2023 — the month before Milei took office — and June 2026, according to Argentina’s national statistics agency (INDEC), industrial output fell by 7%. Industrial capacity utilization currently stands at 58.4%.
One of the most high-profile cases was the closure of tire manufacturer Fate, founded in 1940 and long considered a symbol of Argentine industry.
In recent days, Economy Minister Luis Caputo sought to downplay the industry’s difficulties, dismissing critics as “idiots.”
“It sounds as if we had been experiencing an industrial boom, that between 2011 and 2023 the economy was thriving, and that industry was highly competitive and growing spectacularly. The reality was exactly the opposite,” he said.
During that period, Caputo added, the sector contracted by 10%, “despite being subsidized through utility rates paid for by all Argentines.”
Retail has also struggled to recover as consumer demand remains weak. Supermarket sales fell 8.47% between November 2023 and May 2026.
The decline has been even steeper among small retailers. According to the Argentine Confederation of Medium-Sized Enterprises (in Spanish, CAME), sales at small and medium-sized businesses dropped 24% between November 2023 and June 2026.
The government has repeatedly argued that the decline in consumption through traditional retail channels reflects changing consumer habits rather than an overall collapse in demand, pointing instead to the rapid expansion of e-commerce.
Private consultancy Scentia, for example, estimated that online purchases increased by 34.8% during the first half of 2026.
However, the same report noted that this growth was not enough to offset the broader weakness in consumption, which declined 2.9% year-to-date.
Construction has also been hit hard. Since Milei took office, activity has fallen 20%, according to INDEC data.
The decline is a direct consequence of the libertarian government’s decision to halt public infrastructure spending as part of its effort to achieve a fiscal surplus.
Together, the three sectors account for nearly 38% of employment in Argentina. Retail leads with 19.2% of total employment, followed by manufacturing at 10.8% and construction at 8.4%.
The government argues that rapid growth in extractive industries such as mining and oil will eventually offset job losses in those sectors.
For now, however, primary industries account for just 0.9% of total employment in Argentina.
The government remains optimistic. Deregulation Minister Federico Sturzenegger predicted several months ago that millions of people would relocate across Argentina to take advantage of opportunities created by these industries.
In the case of Neuquén, he estimated that the development of Vaca Muerta alone could attract 1.5 million new residents over the next 30 years. Mining projects, meanwhile, could bring an additional one million people to Catamarca and another 800,000 to San Juan.
Fewer companies, more unemployment
According to the think tank Fundar, Argentina has lost 28,262 companies since Milei took office — equivalent to 5.5% of the country’s businesses.
The decline, the steepest recorded during the first 29 months of any Argentine administration, is one of the factors behind rising unemployment and worsening job insecurity.
During the first quarter of 2024, the unemployment rate reached 7.7%, up 0.8 percentage points from the same period a year earlier. The latest official figures from INDEC showed unemployment edging up to 7.8% in the first quarter of 2026.
At the same time, informal employment has continued to rise, reaching 44.2% of all workers — the highest level since the fourth quarter of 2023, when the current methodology was introduced, according to consultancy Analytica.
“The level of informal wage employment in the first quarter was the highest since the end of 2007, comparable only to the fourth quarter of 2008 and the second quarter of 2022,” the firm said.
Analytica also stressed that “looking only at the unemployment rate can be misleading,” because the quality of employment has deteriorated significantly.
“Formal employment declined by 166,800 jobs while informal employment increased by 379,600, resulting in a net increase in low-quality employment,” the consultancy noted.
This trend has also fueled a surge in the number of people working as app-based delivery drivers and ride-hailing drivers.
According to the App-Based Workers Union (Sitrarepa, for its Spanish acronym), approximately one million people now work through digital platforms.
Lower wages and rising household delinquency
Even within the formal economy, workers have also come under pressure. Between November 2023 and May 2026, registered private-sector wages fell by 3.6% in real terms, according to estimates by economist Nadín Argañaraz.
The losses have been even greater for public-sector employees, whose real wages have declined 17.8% since Milei took office.
Federal government employees have been hit hardest, suffering a 36.5% drop in purchasing power. Provincial public-sector workers, meanwhile, have lost 9.8%.
The minimum wage has also been among the biggest losers under the libertarian administration.
According to estimates by the Center for Research and Training of the Argentine Republic (CIFRA), affiliated with the Argentine Workers’ Central Union (CTA), the minimum wage has lost more than 40% of its purchasing power since Milei took office.
This has unfolded alongside a phenomenon rarely seen in recent decades: a sharp increase in household loan delinquency has reached record levels.
According to estimates by consultancy 1816, the household default rate reached an all-time high in May, when 12.8% of all loans were delinquent. The upward trend finally paused in June after 19 consecutive months, although only marginally, with the delinquency rate easing to 12.7%.
Central Bank head and Caputo’s right-hand man, Santiago Bausili, acknowledged during a press conference this week that household delinquency “is a problem” but argued that it is approaching a turning point.
“These processes are slow. I compare them to digestion,” he said.
“They have their own dynamics, which are very difficult to accelerate. They follow their own timeline,” Bausili added, once again ruling out any government bailout for indebted households, saying it is ultimately a matter between private parties.
