Argentina’s economy is emerging from recession in an important step for Javier Miley

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Argentina’s economy emerged from a severe recession in the third quarter of 2024 in a milestone for liberal President Javier Miley as he attempts to end the country’s long-running crisis.

Gross domestic product grew by 3.9 percent in the July-September period on a seasonally adjusted basis compared with the previous quarter, marking Argentina’s first quarter of growth since it entered recession in late 2023, the national statistics agency said on Monday.

Compared to the same period in 2023, third-quarter GDP contracted by 2.1 percent.

The rebound comes as well mercy It marks a year since he took office, during which he has unleashed brutal spending cuts and an aggressive deregulation campaign. The program has reduced the country’s triple-digit annual inflation rate, made the liberal one of the most prominent leaders of the global right, and won glowing endorsements from the likes of US President-elect Donald Trump and one of his closest advisers, billionaire Elon Musk. .

Argentina Sovereign bonds rose on Monday, with the premium over US Treasuries required by investors to hold their debt falling 4.4 percent to 677 basis points, down from more than 2,000 when Miley took office.

The economic crisis, largely caused by previous governments’ use of inflation-fueled money printing to finance spending, was exacerbated in the first months of Miley’s presidency by austerity and inflation. The country’s poverty rate rose 11 points in the first half of 2024 to 53 percent.

While JP Morgan said it expects Argentina’s economy to end 2024 with a 3 percent annual contraction, it expects 5.2 percent growth in 2025. However, that would only bring its per capita GDP back to The level of 2021, when the economy was emerging from the crisis. pandemic.

This expansion was driven by a recovery in consumer spending and capital investment after a sharp decline earlier this year, and continued strong growth in agricultural and mining exports. The manufacturing and construction sectors remain in deep recession.

Analysts have warned that Miley must achieve sustained economic growth to begin raising Argentines’ living standards if he is to win midterm elections in late 2025, where he hopes to expand the small minority in Congress in his La Libertad Avanza party.

Significant challenges remain for his government, including lifting Argentina’s capital and currency controls, which prevent foreign investment and prevent the central bank from building its hard currency reserves.

Sebastian Meniscalde, director of Ecogo Consulting in Buenos Aires, said he expects the economy to continue growing in 2025 “although at a slower pace” than the initial recovery.

“That would still give Miley a solid figure of 5 percent next year… “But the impact will be felt very unevenly across industries and groups of workers,” he added.