Stabilization works on paper while Argentina's real economy collapses into ninth recession.

Argentina's economy enters August with a structural tension that no single data point manages to resolve: the stabilization program is working on its nominal fronts —exchange rate, reserves, Treasury financing— but real activity, employment and consumption remain unresponsive, producing a fracture that the International Monetary Fund itself put into words during the visit of its managing director, Kristalina Georgieva.

The S&P Merval closed July at 3,291,323 points, posting a gain of just 2.4% for the month in pesos and 7% in dollars year-to-date, a performance that looks respectable in nominal terms but still lags accumulated inflation, estimated at roughly 18% for the first seven months. JP Morgan's country risk index stood at 430 basis points at the end of July, having touched a monthly low of 398 early in the month before rebounding. Among Argentine ADRs, Friday's session was awash in red, with Banco Supervielle falling 5.9% and Banco Francés 4.3%, though Bioceres rallied 11.5% in a sign that the agribusiness sector retains investor appeal. The wholesale dollar closed July at $1,485, gaining a mere 0.2% on the month, well below the period's inflation, while the blue dollar held at $1,560, with a spread against the official rate barely above 5%.

The most revealing data point of the week comes not from markets but from the real economy: the Composite Coincident Index of Economic Activity, compiled by the Centro de Investigaciones sobre el Ciclo Económico, posted a 0.1% decline in June, and the level of activity remains below that of February 2025. Private analysts are already labeling the period a potential ninth recession since 1994. Company creation hit its lowest level since the 2002 crisis, according to consultancy CP Consultora, whose data show that the rate of new firm openings has collapsed while closures remain at normal levels. Against that backdrop, mass consumption dropped 2.7% year-on-year according to Scentia, sales of 0km vehicles fell 30.3% year-on-year in July, bringing the year-to-date contraction to 12.8%, and bounced checks for insufficient funds surpassed 100,000 in June, 57% more than a year earlier. Household delinquency reached 12.8% in May, its highest level in more than 24 years, with banks signaling tighter criteria for extending credit.

Faced with this picture, President Javier Milei chose the week to unveil his most ambitious package of structural reforms since taking office: an overhaul of the Central Bank's Organic Charter, a permanent fiscal straitjacket, capital markets reform and deregulation of the insurance sector. The BCRA proposal seeks to scrap the multiple-mandate framework instituted in 2012, prohibit any form of Treasury financing, tighten requirements for removing the bank's authorities and institutionally shield the current head of the entity, Santiago Bausili, whose technical term runs through September 2028. Consultancy EconViews, led by Miguel Kiguel, described the project as "an important institutional shift," though it noted that its success hinges on not being reversed politically. Milei categorically ruled out any pre-election "plan platita": "Not with me. I'm not going to hand over my reputation by pulling the outrageous stunt Kirchnerism pulled," he told La Nación+. Caputo also announced an expansion of VAT rebates for SMEs worth $50 billion, acknowledging that the sector faces elevated financing costs and pressure from tax collection agencies.

The Chinese swap front adds diplomatic urgency to the week ahead: the USD 19 billion currency swap agreement expires this Thursday, August 6, and the BCRA has already confirmed it is seeking a renewal for another three years through 2029. Bausili said negotiations are underway and that there is no plan to eliminate it. The rollover is regarded as a pillar of the reserves policy, even though the BCRA has bought over USD 13.3 billion so far in 2026, exceeding the minimum target set under the IMF program.

The divergence between the natural resources export sector and the rest of the economy was made unmistakably clear across multiple indicators this week. Mining exports hit a historic record of USD 4.742 billion in the first half, a 74.4% year-on-year jump driven by lithium, which surged 185%. Vaca Muerta's "North Pole" produced nearly 80,000 barrels of oil per day in June, more than Santa Cruz, Mendoza and Río Negro combined. Pampa Energía received RIGI approval to build a granulated urea plant in Bahía Blanca for USD 2.7 billion, and the Vicuña mining project —a joint venture between BHP and Lundin Mining— was granted the same regime for an initial investment that could reach USD 9.7 billion. Yet economist Ricardo Arriazu, one of the voices Milei listens to most closely, warned of a paradox unprecedented in his professional experience: "I've never before seen a large dollar surplus coexisting with a shortage of jobs." Formal private salaried employment has shed 235,000 positions since November 2023, while the textile industry lost 15,468 registered jobs over the past year and sector output fell 25.6% year-on-year in May.

July inflation is estimated between 1.9% and 2.1% by private consultancies, with the official INDEC print due August 13. Twelve-month inflation expectations tracked by Universidad Torcuato Di Tella rose to 35.8%, nearly four points above June. The start of August brings a new round of tariff hikes: bus fares climbed as much as 4.4%, train fares 10.5%, with adjustments to electricity, gas, water, private health insurance and school tuition set to hit upcoming bills. Energy subsidies in the first half of 2026 reached USD 2.147 billion, an 80% year-on-year jump, according to consultancy Economía & Energía, marking the first significant rebound after two years of decline and putting pressure on the official narrative of subsidy dismantling.

An operational risk note emerged with the cyberattack suffered by Oleoductos del Valle (Oldelval), the YPF-controlled company that transports 75% of Vaca Muerta's crude. Although the company ruled out any impact on oil flow and declared the incident "100% under control," the episode underscores the vulnerability of Argentina's critical energy infrastructure to external threats. In parallel, port pilots launched a work stoppage