Argentina's economy shrank 2.6% in February, marking the steepest monthly contraction under President Javier Milei as his anti-inflation austerity program continues to weigh on major industries. The drop follows GDP growth of 4.4% in 2025, revealing a fragile economic recovery. Manufacturing and retail, Argentina's largest employers, face significant challenges despite Milei's success in reducing inflation and relaxing currency controls.

The economic recovery remains deeply uneven, with export-focused sectors like mining and agriculture expanding 9.9% and 8.4% respectively, while manufacturing and retail contracted by 8.7% and 7%. Unemployment climbed to 7.5% in Q4 2025, a 1.1-percentage-point increase from the previous year. Milei's approval rating fell to 36%, the lowest since taking office, as his tight monetary policy continues to suppress investment and activity.

The government faces pressure to adapt its program ahead of Milei's 2027 re-election bid. Critics argue that focusing solely on inflation reduction may not be sufficient for victory. Milei aims to transition Argentina's economy away from manufacturing toward mining, energy, agriculture, and technology sectors that currently employ just 12% of the workforce.