(Bloomberg) -- Argentina’s economy slumped for a fourth straight month in February as President Javier Milei’s economic shock therapy plan took hold.

Economic activity fell 3.2% in February from a year ago, less than expectations for a 6% drop, according to analysts surveyed by Bloomberg. On a monthly basis, activity declined 0.2%, according to government data published Tuesday. Argentina’s economy contracted 1.9% in the fourth quarter of 2023.

Since taking office in December, Milei lifted price controls, froze public works and sharply devalued the currency. His austerity measures helped cool monthly inflation in the first three months of the year, falling from a three-decade high of 26% in December. Milei used high inflation to further skim costs by letting public wages and pensions fall far behind monthly rises in consumer prices.

The effort is, according to Milei, paying off. The president went on national television Monday night to trumpet the country’s first quarterly fiscal surplus since 2008. The surplus, he said, is the key to eradicating inflation, the source of perennial crisis in Argentina.

“I want to tell Argentines that I understand the situation is hard but also that we are halfway there. This is the last stretch in a heroic effort Argentines are doing and for the first time in a long time, this time will be worth it,” he said at a prime time address from the presidential palace, flanked by his economy minister and central bank president.

Read more: Milei Trumpets Quarterly Budget Surplus in Argentina TV Address

Economists are more cautious. They interpret the fiscal surplus as good news but worry about its sustainability, given its crippling impact on economic activity. Construction activity slumped 24.6% annually in February and spending at small- and medium-size businesses — Argentina’s largest sector of employment —  fell 12.6% in March.

Economists surveyed by Argentina’s central bank forecast gross domestic product contracting 3.5% this year, according to a March poll.

--With assistance from Rafael Gayol.

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