In a effort to reach the legislative elections October with a stabilized dollar And an inflation in descent, the President Javier Milei Government He has prioritized a monetary squeeze that, although he has achieved some calm in the markets, is cooling the economy at a worrying pace. High interest rates, implemented through a Increase in bank lace To absorb liquidity, they are starting with be reflected in an economic activity He stopped growing several months ago.
This scenario Raise questions about sustainability of the economic recovery initiated in 2024 and focuses on the sectors that have emerged as winners and losers under the economic model of the current administration. While The government is committed to macroeconomic stability As a prelude to a post -election reactivation, the data suggests that the cost of this strategy could be a prolonged brake on growth, with unequal impacts between key sectors of the economy.
A stagnant recovery: what the numbers show
He Monthly Economic Activity Estimator (EMAE)prepared by the National Institute of Statistics and Census (INDEC)offers a clear radiography of economic cooling. In February 2025, the EMAE desestationalized index reached a maximum of 153.4 pointsexceeding the 151 points of March 2023, when the economy entered into recession due to a severe drought and macroeconomic imbalances.
However, recovery was abruptly stopped in March, with a contraction that He failed to revert fully in April. May and June data confirmed the descending trend, and in July, according to estimates by the consultancy Orlando J. Ferreres & Associates, economic activity fell 1% Regarding the previous month.
A complementary indicator, the “BA economic pulse” Developed by the Province Bank, it reinforces this perception. This index, which uses artificial intelligence to monitor in real time the activity in the province of Buenos Aires – a reliable thermometer of the national economic performance due to its weight in production and employment – registered an average fall of the 0.4% In the last four weeks (Third and Fourth of July, and First and Second of August). This contraction reflects the continuity of cooling Observed in recent months, in a context where financial conditions have harden even more after the adjustment of fees and the pressure on the exchange rate in July.
Winners and losers of the economic model
TO 18 months of the assumption of the Mile AdministrationI, the economic model based on fiscal discipline, the reduction of subsidies and exchange stabilization has generated clear winners and losers. When disaggregating the EMAE data and comparing them with June 2023, a marked sector heterogeneity is observed.
Winners:
Agroindustry: The agricultural and livestock sector has been one of the main engines of recovery. After a strong fall in 2023 due to an extreme drought, agriculture bounced a 82.8% In relation to 2 years ago. The favorable climatic conditions and the government’s commitment to promote exports have consolidated its position as an economic pillar.
Mining: With a growth of 15.1% In the same period, the mining sector, particularly the extraction of lithium and other minerals, benefits from global demand and government incentives to attract foreign investments.
Financial intermediation: The financial sector has experienced an boom, with an increase in 14.6% Since June 2023, according to INDEC. The deflation and reduction of the exchange gap have favored banks and financial entities, which have seen an increase in credit demand.
Losers:
Construction: This sector, intensive in labor, suffered a fall in the 15.6% In relation to 2023, according to INDEC. The paralysis of public works since December 2023 and the reduction of public spending (-30% in real terms) have been the main factors. The asphalt, iron and cement offices collapsed, reflecting an abrupt brake on the activity.
Manufacturing industry: With a setback from 13.4% In the same period, the industry faces structural challenges. The sector has been particularly beaten by the fall in domestic consumption and the loss of competitiveness derived from a little competitive exchange rate.
Trade: Wholesale and retail trade recorded a fall in 9.4%affected by the loss of purchasing power of households, which translates into minor private consumption. Inflation, although in descent, continues to erode real income, especially in sectors of non -essential goods.
These three loser sectors – consolidation, industry and commerce – are the ones that generate the greatest employment in Argentina, which explains the destruction of 120,000 private jobs recorded in 2024. This impact on the labor market makes it difficult for the population to perceive the benefits of macroeconomic stabilization, generating social tensions in an electoral year.
The challenges for the elections
With only eight weeks to the legislative elections, the government faces a delicate balance. On the one hand, seek Maintain exchange stabilityon the other, the Current financial conditions —They interest rates and exchange restrictions – are limiting the recovery capacity of the economy. The IMF projects a growth of 5.5% By 2025, promoted by the energy sector, agribusiness and an incipient recovery of consumption, but this scenario depends on the consolidation of post -election reforms and a rapid normalization of financial variables.
Where does the economy go?
The Milei government is committed to the fact that, after the elections, the economy will resume the growth path observed in the second half of 2024, promoted by agriculture, mining and the recovery of industry and commerce. However, the dependency of sectors linked to natural resources and the Persistent weakness in intensive industries In employment they raise doubts about the sustainability of this recovery. The sector heterogeneitywith clear winners such as agriculture and mining, and losers such as construction and industry, reflects an economic model that prioritizes macroeconomic stability and exports on domestic consumption and employment.
For investors, opportunities are clear in sectors such as Agroindustry, Mining and Energy. However, contraction in consumption and investment in infrastructure suggests caution in sectors such as trade and construction, where recovery could be delayed. Country risk, which fell from 2,500 basic points In August 2023 to less than 600 in January 2025, it reflects an improvement in trust, but bounced and today is in the range of 800-900 points, which limits access to external financing.
In conclusion, the government’s strategy to prioritize exchange stability and disinflation has stabilized key indicators, but at a high cost for economic activity. The future of recovery will depend largely on the decisions of the Central Bank of the Argentine Republic (BCRA) to make financial conditions more flexible and stimulate the economy. A gradual calibration of interest rates, which allows the credit to be reactivated to the private sector without destabilizing the exchange rate, will be crucial to boost sectors such as industry and commerce, which continue lagging behind. Likewise, a strategic management of international reserves could facilitate a decrease in the country risk and the return to the credit market, a fundamental condition to ensure compliance with next year’s commitments. The BCRA’s capacity to implement financial adjustments that balance growth and stability will be decisive to avoid prolonged recession and consolidate a sustainable recovery in 2026.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
