Argentina Economists See a 1% Quarterly Contraction

ARGENTINA · ECONOMY

Argentina’s own central bank survey now points to a quarterly contraction, even as bond markets keep rallying.

The Argentina economy shrank an estimated 1.0% between July and September, according to forecasters polled by the central bank. The survey, published on Tuesday, 6 October, also cut expected growth for 2026 to 1.5%, from 2.1% a month earlier.

The figures add weight to signs that President Javier Milei’s recovery has stalled. For US investors, they test the growth story behind Argentina’s dollar bonds and New York-listed shares, which rallied anyway on Tuesday.

What the Central Bank Survey Shows

The Market Expectations Survey, known by its Spanish initials REM, is a monthly poll run by the Central Bank of Argentina (BCRA). This edition gathered 44 participants, 33 consultancies and research centres and 11 financial institutions, between 28 and 30 September.

The median forecast for the third quarter swung to a 1.0% contraction, 2.1 percentage points worse than in the previous survey. Participants expect a rebound of 1.8% in the fourth quarter and 0.7% in the first quarter of 2027.

For the full year, the median now sees growth of 1.5% over 2025, down 0.6 points. The ten most accurate forecasters in the bank’s ranking, the so-called Top 10, are gloomier at 1.2%.

Two straight quarterly declines are the common definition of a technical recession. The Buenos Aires financial daily Ámbito wrote on Tuesday that the market now sees the Argentina economy in recession.

The Puerto Madero business district in Buenos Aires at dusk, in July 2024. Photo: Vlasta x / Wikimedia Commons (CC BY-SA 4.0)

Inflation, the Peso and Interest Rates

Forecasters expect monthly inflation of 1.9% for September, 0.1 points more than a month earlier. Core inflation, which strips out volatile and regulated prices, is seen at 1.8%.

They see the peso at an average 1,545 per US dollar in October and 1,614 by December. That would leave it about 6% weaker than the official rate of roughly 1,519 on 6 October.

TAMAR, the benchmark rate on large bank deposits, is expected at 23.56% a year in October and 23.50% in December. Unemployment is seen at 7.5% in the third quarter, up 0.2 points, and 7.7% in the fourth.

Forecasters expect a 2026 trade surplus of US$25.7 billion, on exports of US$101.2 billion. They trimmed the expected primary budget surplus to 15.0 trillion pesos (about US$9.9 billion), down 400 billion pesos (about US$260 million).

Why the Government Disputes the Reading

Economy Minister Luis Caputo has acknowledged that the economy is now growing at a slower pace, Infobae reported on Monday. He blamed July’s drop on what he called macroeconomic noise.

Official data showed activity falling 2.9% in July from June, according to Infobae. Caputo argues the seasonally adjusted series is too volatile and points to a trend measure showing 29 months of growth.

The central bank’s own survey now cuts against that message. Its participants include the consultancies and banks whose reports guide foreign investors in Argentine assets.

What It Means for You

Markets shrugged off the survey on Tuesday. The country risk spread, JP Morgan’s gauge of Argentina’s premium over US Treasuries, fell 4.3% to about 573 basis points, Ámbito reported.

The long-dated Global 2038 and Global 2035 dollar bonds rose 1.6% and 1.5%, helped by spillover from Brazil’s election results. In New York, the shares of BBVA Argentina and Central Puerto each gained 2.3%.

Gross central bank reserves rose US$326 million to US$49.12 billion, a two-week high, Ámbito reported. The bank bought US$41 million that day, taking 2026 purchases to US$14.75 billion.

For US bondholders, the risk is that slower growth erodes tax revenue and the primary surplus that funds debt payments. Forecasters have already shaved that surplus, so the trend in revenue is worth watching.

What Is Not Known

The figures are private forecasts collected by the central bank, not its own projections or official statistics. INDEC, the national statistics agency, has not yet published August or third-quarter activity data.

It is unclear how deep any contraction was, or whether the government will adjust policy in response. Peso conversions in this article use about 1,519 pesos per US dollar, the official rate on 6 October.

What Comes Next

INDEC publishes September inflation later this month, the first test of the 1.9% forecast. Official third-quarter output figures follow in December, and the next central bank survey in early November.

One weak quarter would not mean a crisis, since forecasters still expect growth to resume before year-end. Nor does Tuesday’s bond rally mean the slowdown is over.

Frequently Asked Questions

What is the REM survey?

The Market Expectations Survey is a monthly poll of economists run by the Central Bank of Argentina. The September edition had 44 participants and was published on 6 October.

Is Argentina in a recession?

Not officially, because third-quarter GDP data is due only in December. Forecasters expect a 1.0% contraction for that quarter, while the government says the trend is still growth.

What exchange rate do analysts expect for the peso?

The median forecast is 1,545 pesos per US dollar on average in October and 1,614 in December. The official rate was about 1,519 on 6 October.

How does this affect US investors?

Slower growth could weaken the budget surplus that supports Argentina’s dollar bonds. So far, bonds and New York-listed shares have kept rising.

Who is Luis Caputo?

Luis Caputo is Argentina’s economy minister under President Javier Milei. He says the economy is still growing on trend and blames July’s drop on temporary noise.

Sources: Central Bank of Argentina (BCRA), Market Expectations Survey, September 2026; BCRA, REM data tables; Ámbito, REM; Ámbito, bonds and country risk; Ámbito, reserves; Infobae, Caputo (all accessed 7 October 2026).