Argentina's economy looks set for recession after August data confounded hopes of a rebound from July's sharp contraction. Argentina's economy appears to be heading into a fresh recession after official data for August failed to deliver the rebound that economists had widely expected following a sharp contraction in July. Many analysts had pencilled in a quick recovery; instead, the latest figures showed activity weakening further.

President Javier Milei's government has pursued aggressive spending cuts and deregulation since taking office, a program credited with sharply slowing inflation and winning early praise from investors. Sustaining growth has proven harder, however, with household consumption and industrial output both struggling through the second half of the year.

Economists had pointed to firmer exports and a steadier peso as grounds for optimism, but the August figures suggest the slowdown is broader than anticipated. The data adds pressure on the government just as Milei looks to defend his economic record ahead of further political tests in the months ahead.