Argentina’s economy has officially emerged from recession, with GDP expanding by 3.9% in the third quarter of 2024 compared to the previous quarter, marking a critical milestone for President Javier Milei’s administration. This represents the first quarter of growth since late 2023, the national statistics agency reported on Monday.
According to the Financial Times, the rebound comes as Milei marks one year in office, during which he has implemented aggressive spending cuts and sweeping deregulation measures. These reforms have sharply reduced Argentina’s triple-digit inflation, earning him endorsements from prominent figures such as U.S. President-elect Donald Trump and billionaire Elon Musk.
Despite the recent growth, GDP contracted by 2.1% compared to the same period in 2023, reflecting the deep economic challenges still facing the country. While agriculture and mining exports remain strong, manufacturing and construction sectors continue to struggle.
The Financial Times noted that Argentina’s sovereign bonds rallied on the news, with the premium over U.S. Treasuries dropping to 677 basis points, significantly lower than the more than 2,000 basis points seen when Milei took office. However, the economic recovery has come at a steep cost. The poverty rate surged to 53% in the first half of 2024, largely due to austerity measures and inflationary pressures.
Economic analysts, including Sebastián Menescaldi of Buenos Aires consultancy EcoGo, project 5.2% growth for Argentina in 2025, driven by continued export strength and a rebound in consumer spending. However, challenges remain. The Milei administration must address capital and currency controls, which deter foreign investment and hinder the central bank’s ability to build hard currency reserves.
The Financial Times highlighted that, while the recovery is promising, lasting economic growth will be essential for Milei to improve living standards and secure political gains in the 2025 midterm elections. “The effects of growth will be felt unevenly between industries and groups of workers,” Menescaldi added.
