Market considers economy in recession as it curtails 2026 growth prospects

Market analysts agree that the Argentine economy will grow much less than originally estimated in 2026, with many estimating that the economy is already in a recession. 

Those conclusions stem from the September Market Expectations Survey (in Spanish, REM), a monthly poll carried out by the Central Bank. 

The analysis gathers forecasts made by more than 40 participants — local and international consulting firms, research centers, and financial entities — regarding the main variables of the local economy.

The report projected a deterioration in economic prospects for the third quarter and the remainder of the year. In addition to lower growth, they estimate a rise in inflation and unemployment. The only variable they consider will not change is the U.S. dollar-peso exchange rate. 

Is the economy in a recession? The report estimated that seasonally adjusted gross domestic product (GDP) contracted 1% in the third quarter of 2026, a 2.1 percentage point correction compared to the previous month’s 1.1% growth projections. 

Given that the second quarter of the year showed a 0.6% seasonally adjusted contraction, lack of growth in the third quarter would mean the economy is officially in a “technical recession.”

Recovery, however, is expected for the last quarter of the year, with a projected 1.8% growth, a 0.5 percentage point increase compared to the previous survey (+1.3%).

That did not prevent the forecast for the rest of the year from also being revised downward. Estimated growth for 2026 in the August REM was 2.1% year-on-year. The latest update curtailed that to 1.5%. 

One of the factors behind the downward correction is the poor performance of real economy sectors (industry, commerce, and construction), whose decline is not being offset by the export boom in minerals, energy, and agriculture.

One of the hardest-hit sectors is manufacturing. 

After a 5% month-on-month seasonally drop adjusted in July — the largest drop since March 2025 — a Wednesday report showed a 1.9% rise in August. The improvement, however, is not enough to recover losses from the previous month. 

Compared to December 2025, it is down 1.6% and more than 7% (123.5) since the arrival of President Javier Milei. 

Exchange rate, unemployment, and inflation Labor market expectations also worsened compared to the previous survey.

Analysts estimated unemployment will reach 7.5% in the third quarter of 2026, 0.2 percentage points higher than in the previous measurement. For the fourth quarter, the projected unemployment rose to 7.7%. 

Regarding inflation, they forecast a 1.9% rate for September — an increase compared to the previous 1.8% — and project the figure will close at 30% for the year. August projections had annual inflation at 27.7%.

Exchange rate projections were the only indicator that showed an improvement compared to previous estimates. 

The rate for October is expected to end at AR$1,545 per U.S. dollar, about AR$20 below the previous survey. The December rate projects to be AR$1,614, equivalent to an 11.5% y-o-y rise.