Argentina's economy recovers under Milei's leadership

Argentina's economy made a remarkable turnaround in the third quarter of 2024, breaking free from a severe recession. This marks a significant achievement for libertarian President Javier Milei, who has committed to ending the country's prolonged economic crisis. The gross domestic product grew by 3.9 percent from July to September in seasonally adjusted terms compared to the previous quarter, representing the first growth since entering the recession at the end of 2023, the national statistics agency reported on Monday. However, compared to the same period in 2023, GDP shrank by 2.1 percent. This recovery coincides with Milei's one-year anniversary in office, during which he has pursued drastic spending cuts and resolute deregulation. This strategy has reduced the country's triple-digit annual inflation rate and made Milei one of the most prominent figures of the global right, receiving recognition from personalities such as U.S. President-elect Donald Trump and billionaire Elon Musk. Argentine government bonds surged on Monday, with the premium over U.S. Treasury bonds falling by 4.4 percent to 677 basis points, a substantial drop compared to over 2,000 points at the start of Milei's term. Despite ongoing challenges, analysts expect the economy to grow by 5.2 percent in 2025, although this would only restore the per capita GDP of 2021. The recovery was driven by an increase in consumer spending and capital investments after a sharp decline earlier in the year, as well as by sustainable growth in agricultural and mining exports. However, the manufacturing and construction sectors remain severely affected. Experts warn that Milei must deliver sustainable economic growth to improve Argentinians' living standards if he is to succeed in the midterm elections at the end of 2025. Major challenges for his government include easing capital and currency controls, which deter foreign investment and prevent the central bank from building its foreign reserves. Sebastián Menescaldi, director of the consulting firm EcoGo in Buenos Aires, predicts that the economy will continue to grow in 2025—albeit at a slower pace. He added that Milei could achieve an impressive 5 percent next year, but with uneven impacts between different industries and worker groups.