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 – Argentina entered a technical recession in the first quarter of the year, official data showed on Monday, and job losses mounted amid a tough austerity drive by libertarian President Javier Milei who is prioritizing restoring fiscal order.

The South American country’s gross domestic product (GDP) shrank 2.6% in the first quarter of the year versus the final quarter of 2023, the second consecutive quarter-on-quarter contraction, the usual definition of a recession.

The quarter marks the first full period under Mr. Milei who took office in December after winning a shock election last year, when he often campaigned with a chainsaw as a blunt illustration of his plans to slash spending and hit a zero fiscal deficit.

The official INDEC statistics agency also released jobs data, which showed the jobless rate rising to 7.7% in the first quarter, up from 5.7% at the end of last year. That meant some 300,000 newly unemployed people since the previous quarter.

Triple-digit inflation and the recession have hit consumers hard and hurt sales of products like beef, while Mr. Milei’s spending cuts have seen state infrastructure projects halted and major job losses in sectors such as construction.

Mr. Milei, an economist and former pundit, has argued that the country needs to get its finances in order following years of fiscal deficits that have led to regular defaults on sovereign debts and hurt the country’s reputation with global investors.

Since taking office, he has spurred markets with his steely focus on a fiscal surplus, which he has so far managed to achieve. Bonds and equities have rallied hard, but the economy has taken a hit, with poverty and homelessness rising.

He argues that the tough fiscal medicine is necessary and that the economy will start to turn around.

The INDEC data showed that year-over-year, the economy dipped 5.1% in the first quarter, slightly beating analyst forecasts of a 5.25% contraction.

Private consumption slid 6.7% on an annual basis in the quarter, while public consumption fell 5%, data showed. Imports also sank by 20.1%, but exports climbed 26.1%. – Reuters