Economic Activity Declines in May
The latest report from the National Institute of Statistics and Censuses (Indec) indicates that economic activity fell by 0.5% in May, marking the second consecutive monthly decline following a 1.5% drop in April. Despite this downturn, an annual comparison shows a modest growth of 0.2%.
Sector Performance Overview
May saw eight out of fifteen sectors comprising the Monthly Economic Activity Estimator (EMAE) show growth compared to the previous year. Leading the way was the Mining and Quarrying sector, which experienced a remarkable year-on-year increase of 15.7%. Additionally, the Electricity, Gas, and Water sector also reported an uptick of 8%.
Focusing on Agriculture, Livestock, Hunting, and Forestry, this sector grew by 4.6% year-on-year, contributing significantly to the EMAE’s overall performance. Together with Mining and Quarrying, these sectors accounted for an addition of 1.2 percentage points to the annual growth of the index.
Struggles in Other Sectors
Conversely, seven sectors witnessed declines, with Fishing experiencing the most significant drop at 29.3%. The Manufacturing Industry and Wholesale, Retail, and Repair Trade sectors also faced downturns, recording declines of 5.6% and 4.3% respectively. Collectively, these three sectors detracted 1.4 percentage points from the EMAE’s annual variation.
Government Perspective on Economic Trends
Minister of Economy, Luis Caputo, noted on social media that despite the current downturn, the economic activity has shown an overall growth of 1.7% in the first five months of the year compared to the same period in 2025. He highlighted that the EMAE is on a growth trajectory, recording 26 consecutive months of expansion, the longest streak since 2011.
Fluctuating Economic Behavior
The first four months of 2026 displayed varied economic behavior, with fluctuations noted in January through April. Although projections indicate potential growth for the year, many analysts have tempered their expectations, now estimating a growth rate of less than 3.5%.
Two-Speed Economy
The current situation presents a “two-speed” economy, illustrated by advancements in the agriculture, mining, and energy sectors, juxtaposed against sluggish performance in industry and construction.
Strategic Initiatives from the Economy Ministry
Looking forward, Caputo emphasizes revitalizing the construction sector as a key to economic recovery. He mentioned ambitious plans, including the planned concession of 9,000 kilometers of national routes, asserting that the “best 18 months” are yet to come.
Construction Sector Discussions
In light of these challenges, discussions are underway among Ministry of Economy representatives and stakeholders to address outstanding debts with state contractors. Additionally, several initiatives are in the pipeline to jumpstart housing construction for the middle class. Significant resources could be raised through the sale of shares from the Sustainability Guarantee Fund (FGS), which can alleviate mortgage burdens for prospective homeowners.
Future Credit Incentives
To catalyze recovery, the government’s economic team is exploring ways to incentivize credit in both pesos and dollars, particularly for construction projects. Business leaders are proposing to allocate FGS funds to reduce mortgage amounts substantially.
Overall, while economic activity in May showcases troubling trends, strategic initiatives in construction and targeted sector support may pave the way for future recovery.
News in development…