Economic activity surged 5.2% year-on-year, but manufacturing output, construction, and consumption have yet to bottom out, widening the gap between the financial sector and the “real economy.” “Industry remains in negative territory despite the overall figures,” an expert told Sputnik .

President Javier Milei celebrated the recovery of the Argentine economy, reflected in the 0.5% monthly growth in activity in September and the 5.2% year-on-year jump. However, the data is paradoxical: the figure is published amidst a persistent decline in industrial production, commerce, and construction. The duality is telling: the sectors that generate the most employment continue to decline.

The sharp increase is explained solely by the surge in financial intermediation (which jumped 39.7% year-on-year) and the exploitation of natural resources such as fishing (58.2%) and energy and mining (8.1%), all of which saw significant jumps. These sectors contributed the most to the month’s positive impact.

In contrast, the manufacturing sector contracted again. It fell 1% year-on-year in September and 5.1% in August, marking two consecutive months of decline. Construction activity remains around 20% below its 2023 levels, despite some improvements in certain input costs. Weak domestic consumption and the contraction in industrial employment exacerbate this situation.

The Argentine Industrial Union (UIA) warned that the sector’s activity “is stagnant,” with a year-on-year decline of nearly 2% in October. The 0.3% monthly rebound is insufficient to reverse a trend that has persisted since 2014, characterized by uneven performance across sectors and weak domestic demand.

Wholesale and retail trade also showed negative signs. In August, it fell 1.7% year-on-year, amid declining consumption. Electricity, water, and gas consumption fell 1.6%. Public administration spending has now declined for 18 consecutive months. These setbacks reinforce the partial nature of the economic recovery.

The improvement in the Monthly Economic Activity Estimator (EMAE) is also influenced by the “statistical carryover”: the comparison is made against a very weak 2024, which amplifies the year-on-year rates. Private consulting firms point out that the sectors with the greatest relative weight are advancing with less dynamism and that the recovery is only slightly less robust than the aggregate figures suggest.

Beyond all nuances, the consensus of private projections places 2025 growth at around 4%, just below official expectations and with signs of slowing down since June

The macro and the micro

“The industry remains in negative territory despite the overall figures; that’s the great paradox,” economist and consultant Ramiro Tosi told Sputnik. The expert emphasized that “what drives growth is agriculture and mining, and above all, the financial sector, which is experiencing a boom under Milei’s leadership.”

In an interview with this media outlet, Walter Andreozzi, a member of the executive committee of the Argentine Industrial Union (UIA), explained that “we are seeing an economic rebound that is not reaching industry or the people.”

The businessman emphasized that “the industry is in a survival situation, trapped between increasing imports and weak domestic demand.” According to Andreozzi, the sector’s relative weight is decreasing, while the economy grows through channels that do not stimulate employment or national investment.

This imbalance defines the current economic situation: statistical growth coexisting with “a crisis in industrial production,” as the businessman points out. For Tosi, the figure helps avoid a technical recession, but “it’s not cause for celebration, because there’s a lot of pressure on sensitive indicators of the real economy.”

“Spill effect”?

According to Tosi, the financial rebound has clear limitations. The consultant explained that “it won’t generate a sense of well-being, because credit is reviving after disinflation, but without a direct impact on employment.” Meanwhile, Andreozzi highlighted the immediate damage: “We went from producing to importing, and that directly impacts employment.”

The current economic model relies on sectors with low labor costs and high volatility. Tosi explained that “oil and agriculture are the driving forces, while local businesses are in a state of uncertainty.”

The loss of productive density also erodes the social fabric. According to the economist, the rebound doesn’t change the underlying structure: “We’re debating whether we’ll end the year with 4.3% or 4.5% growth, but that doesn’t change the fundamental picture.” Andreozzi, more direct, warned that “Argentina’s industrial base is seriously threatened.”

Both experts agreed that, while the macroeconomic data is undeniable, the current system appears fragile. The businessman stated that “this model is unsustainable for the industry because sales are steadily declining.”