Argentina on brink of recession despite growth in August, experts say

Economic activity surveys for August will likely deliver good and bad news for the government. The good news is that market analysts agree that the economy bounced back following the sharp drop in July.

The bad news is that they forecast that, even with this recovery, a recession could not be avoided. 

“Recession” is the technical term used when activity fails to grow for two consecutive quarters. Argentina fell 0.6% in the second quarter of 2026 and plummeted nearly 3% in the first month of the third quarter.

If private measurements are backed by official data set to be released in the coming days, that means the economy would have to grow close to 6% in September in order to avoid a recession, a task that appears difficult given the track record. 

What analysts are saying Consulting firm Equilibra estimated that the seasonally adjusted monthly growth in August would be 1.4%.

“The ‘sawtooth’ dynamic would persist,” the firm’s economists stated in their report. In year-on-year terms, however, activity would fall 0.5% compared to August 2025.

The “sawtooth effect” is a colloquial term used by economists in Argentina to refer to the constant alternation between months of growth and contraction. 

This dynamic prevents the recovery from consolidating into a sustained trend, creating a monthly “up and down” pattern that resembles the teeth of a saw.

Economists from the consulting firm Eco Go stated that a rebound in August is “to be expected,” although they noted that “stagnation with two speeds remains the norm.” 

This is a reference to the coexistence of the commodity export boom with the collapse of sectors from the real economy.

According to their estimates, activity rebounded 1.1% month-on-month seasonally adjusted in August but fell 0.7% y-o-y.

The most optimistic estimate came from the consulting firm Orlando Ferreres, which calculated a 1.7% month-on-month seasonally adjusted increase and a 0.6% y-o-y rise.

The report, however, clarified that the August rise “must be understood in connection to the previous month’s decline and not as a precursor to similar increases going forward.”

Ferreres also provided a worrying figure: investment fell 5.4% y-o-y, accumulating a 7.9% drop for the first eight months of the year.

Eco Go, for its part, estimated an improvement in monthly investments (+7.2%) and a 4.2% y-o-y fall. They projected that the level of investment has dropped 4.8% since Milei took office in December 2023.

Why a recession is almost inevitable The Argentine economy plummeted 2.9% month-on-month in seasonally adjusted terms in July, a hard blow to the government’s economic plans.

The data caught the market by surprise and even caused financial giants like JP Morgan to cut growth expectations for Argentina in 2026.

Equilibra’s report stated that the economy would need to grow “6% month-on-month without seasonality in September to avoid accumulating two consecutive quarters of decline.”

For reference, the only time since at least 2016 that Argentina experienced 6% monthly growth was in June 2020, with the first easing of the quarantine imposed by the pandemic. 

Since President Milei came into office in December 2023, the month with the highest growth was July 2024 (2.6%). 

Admitting that Argentina is bordering on recession is a sensitive issue that the government seeks to avoid at all costs. Milei recently denied a recession, arguing that the seasonally adjusted measurement is not accurate when it comes to measuring Argentina’s economic transformation.