# Argentine forecasters say the economy is already in recession and cut their 2026 growth forecast to 1.5%

Analysts in Argentina's central bank survey expect a 1% quarterly contraction in the third quarter and September inflation rising to 1.9%.

- Published: 2026-10-07T05:05:29.901Z
- Canonical: https://polylog.news/2026-10-07/argentine-forecasters-say-the-economy-is-already-in-recessio
- Publisher: Polylog (Global desk)
- Section: macro
- Sources: [Ámbito (Economía)](https://www.ambito.com/economia/rem-septiembre-el-mercado-la-ya-entro-recesion-y-ahora-preve-que-el-pbi-crecera-solo-15-2026-n6330834), [Clarín (Economía)](https://www.clarin.com/economia/mercado-espera-recesion-tercer-trimestre-suba-inflacion-19-septiembre_0_uXv6ypci7R.html)

Analysts in the Argentine central bank's monthly survey of market expectations (REM) now say the economy has entered recession, [Ámbito reported](https://www.ambito.com/economia/rem-septiembre-el-mercado-la-ya-entro-recesion-y-ahora-preve-que-el-pbi-crecera-solo-15-2026-n6330834). They estimate a 1% contraction in output between July and September compared with the previous quarter. They now expect gross domestic product (GDP) to grow only 1.5% in 2026.

The forecasts have fallen quickly. In the previous survey, analysts estimated that GDP had already contracted 0.9% in the second quarter and expected 1.1% growth in the third quarter and [2.1% growth for the year](https://calcularsueldo.com.ar/?p=15851). A second quarterly contraction would meet the common definition of a recession.

Inflation is moving in the wrong direction. Forecasters expect monthly consumer inflation of 1.9% for September, higher than in August, [Clarín reported](https://www.clarin.com/economia/mercado-espera-recesion-tercer-trimestre-suba-inflacion-19-septiembre_0_uXv6ypci7R.html). Respondents expect the exchange rate and interest rates to stay broadly stable.

This combination is the most difficult one for President Javier Milei's programme. His government has relied on tight money and a managed peso to bring inflation down. A slowing economy is expected under that kind of policy. What is not expected is monthly inflation rising again while output falls. That points to price pressure from outside the monetary base (the money the central bank itself creates), including imported energy costs during the Gulf war.

## What this means

Argentina's stabilisation depends on a credible peso anchor and positive real interest rates. Both slow activity, and the political case for them rests on inflation continuing to fall. If prices rise while output falls, the government faces a choice. It can keep rates high to defend the peso and lengthen the recession, or ease to support activity and risk the currency. Holders of Argentine dollar bonds, peso carry trades (borrowing cheaply to hold higher-yielding peso assets) and domestic banks are exposed through rates and the exchange rate. Exporters gain if the government lets the peso weaken. From an Austrian view, a recession after years of credit-fuelled distortion is the cost of liquidating bad investment. The worry is that this recession comes with rising inflation. The precedent is Argentina's 2018 crisis, when an external shock combined with recession forced a rapid peso devaluation and an International Monetary Fund programme. The desk's read: over the coming months, the government is likelier to keep the currency anchor and accept weaker growth than to loosen policy before the 2027 elections. A sharp central bank rate cut or a widening of the peso's trading band would show the anchor giving way.

## What to watch

- The official September inflation figure from the national statistics agency, due in mid-October. A reading at or above 1.9% would confirm that disinflation has stalled.
- Monthly economic activity data for July and August. They will show whether the forecast third-quarter contraction is broad or concentrated in a few sectors.
- The peso's position within its official trading band. Pressure toward the upper limit would test the government's commitment to the anchor.