Argentina entered a technical recession in the first quarter of the year, with its GDP shrinking by 2.6% from the previous quarter, marking the second consecutive quarter of contraction, Reuters reports.
This period is the first full quarter under Argentine President Javier Milei, who took office in December and has implemented tough austerity measures to restore fiscal stability. As a result, the unemployment rate rose to 7.7%, up from 5.7% at the end of last year, with about 300,000 people losing their jobs. The country’s triple-digit inflation, recession, and spending cuts have severely impacted consumers and halted state infrastructure projects, leading to significant job losses, especially in construction.
Despite the economic downturn, Milei has managed to achieve a fiscal surplus, which has positively influenced markets, with bonds and equities rallying. However, the economy has struggled and contracted by 5.1% year-over-year, slightly better than the forecasted 5.25% contraction. Private consumption fell by 6.7%, public consumption by 5%, imports by 20.1%, while exports increased by 26.1%. Milei argues that these measures are necessary for the country’s long-term economic recovery.
