Argentina’s surpluses, consumer strength

Argentina’s government ran another bumper primary budget surplus in February, taking President Milei a step closer to his target of achieving a balanced overall budget this year. But while the latest fiscal news is encouraging, a closer look at the data suggests that the improvement in the public finances will be hard to sustain. Otherwise, a raft of activity data out this week highlighted that tight labour markets have continued to support consumer spending in the region. But the flip side is that core inflation remains uncomfortably strong – something evident in the ‘hawkish cuts’ delivered by central banks in Brazil and Mexico this week.