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Argentina’s economy emerged from a severe recession in the third quarter of 2024 in a milestone for libertarian President Javier Milei as he seeks to end the country’s prolonged crisis.
GDP expanded 3.9 percent from July to September in seasonally adjusted terms compared to the previous quarter, marking Argentina’s first quarter of growth since it entered recession at the end of 2023, the agency said on Monday. country statistics.
Compared with the same period in 2023, third-quarter GDP contracted 2.1 percent.
The rebound comes as Milei marks one year in office, during which time he has unleashed brutal spending cuts and a fierce deregulation campaign. The program has brought down the country’s triple-digit annual inflation and made the libertarian one of the most prominent leaders of the global right, earning enthusiastic endorsements from the likes of U.S. President-elect Donald Trump and one of his closest advisors, billionaire Elon Musk. .
Argentina’s sovereign bonds rose on Monday, and the premium over U.S. Treasuries that investors demand to maintain their debt fell 4.4 percent to 677 basis points, down from more than 2,000 when Milei took office.
The economic crisis, caused largely by previous governments’ use of money printing to finance spending, which fueled inflation, had deepened in the first months of Milei’s presidency as austerity and inflation bit. The country’s poverty rate shot up 11 points in the first half of 2024 to 53 percent.
While JPMorgan said it expects Argentina’s economy to end 2024 with a 3 percent annual contraction, it projects 5.2 percent growth in 2025. However, that would only return GDP per capita to the level of 2021, when The economy was emerging from the crisis. pandemic.
The expansion was driven by a rebound in consumer spending and capital investment after a sharp decline earlier this year, and by continued strong growth in agricultural and mining exports. Manufacturing and construction remain deeply depressed.
Analysts have warned that Milei must generate lasting economic growth to begin raising Argentines’ living standards if he is to prevail in midterm elections in late 2025, where he hopes to expand La Libertad Avanza’s small parliamentary minority.
Big challenges remain for his government, including lifting Argentina’s capital and currency controls, which are deterring foreign investment and preventing the central bank from building up its foreign reserves.
Sebastián Menescaldi, director of the EcoGo consulting firm in Buenos Aires, said he expected the economy to continue growing in 2025 “although at a slower pace” than the initial rebound.
“That will still give Milei a strong 5 percent figure next year. . . but the effect will be felt very unequally between industries and groups of workers,” he added.
