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Significance In April the Monthly Estimate of Economic Activity declined by 1.7% year-on-year, accumulating a 4.2% contraction in January-April. President Javier Milei expected the economy to bottom out in March or April, followed by a V-shaped recovery; if this does not happen his popularity will suffer. Impacts A prolonged recession could undermine government’s popular support, fuelling social conflict and putting governability at risk. Milei will remain distanced from political actors such as governors, mayors or union leaders who could help him to manage social discontent. Agriculture, mining and energy, which are expanding this year, will have only moderate spillover effects on growth and employment. With domestic consumption key to GDP, fiscal adjustment, high inflation and growing unemployment will undermine hopes of economic rebound.
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