Economy slips into contraction in the second quarter of 2025

GDP reading: Argentina's GDP was down 0.1% in seasonally adjusted quarter-on-quarter terms in Q2, following a 0.9% expansion in the previous quarter.

Drivers: Compared to the prior period's data, figures in Q2 softened for private consumption (-1.1% on a seasonally adjusted quarter-on-quarter basis vs +2.7% in Q1), fixed investment (-0.5% vs +8.9% in Q1) and imports of goods and services (-3.3% vs +16.0% in Q1). In contrast, readings picked up for government consumption (+1.1% vs -0.7% in Q1) and exports of goods and services (-2.2% vs -2.5% in Q1). In annual terms, economic output expanded 6.3% in Q2, following 5.8% growth in the prior quarter and boosted by a favorable base of comparison—the economy was mired in recession in Q2 last year.

Panelist insight: On the outlook, Itaú Unibanco analysts said: “Given the weak performance of leading indicators for 3Q25 and the impact of high real interest rates on consumption amid political turmoil, we see significant downside risks to our GDP growth forecast of 5.0% for 2025. Manufacturing and construction both declined in July, and tax collection fell in real terms in August. According to Universidad Torcuato Di Tella's monthly index, consumer confidence decreased by 13.9% from July to August, due to deteriorating macroeconomic prospects and decreased willingness to purchase durable goods and real estate.”

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