 "Argentina exits recession in Q3 as Prez Milei eyes growth before mid-terms")
Argentina emerged from a brutal recession in the third quarter, boosting the odds that President Javier Milei heads into next year’s mid-term elections with growth on the rebound alongside cooling inflation.
Gross domestic product expanded 3.9 per cent from July to September compared to the previous three-month period, better than analysts’ expectations for 3.4 per cent growth. From a year ago, South America’s second-largest economy shrank 2.1 per cent in the third quarter, according to government data published Monday. The median estimate of economists surveyed by Bloomberg was for a contraction of 2.6 per cent.
Capital expenditure, consumer spending and exports drove growth in the quarter, while public investment barely rebounded.
Milei’s balancing act between growing Argentina’s economy and cooling inflation while lifting currency controls will be keenly watched by markets as a barometer of his popularity heading into the mid-terms in late 2025 where he’s looking to take seats away from traditional parties.
Argentines endured a recession for three previous quarters that saw more than half the country mired in poverty as inflation wiped out wages and the labor market lost hundreds of thousands of jobs. Milei’s strict austerity exacerbated the decline in activity as his government slashed spending across the board, particularly on public works, a major employer.
Signs of recovery are underway heading into 2025. Beyond the third-quarter growth, wages have surpassed inflation since April, job growth is slowly picking up and private estimates indicated poverty is gradually declining after spiking once Milei took office. Argentines also deposited over $20 billion in the financial system this year as part of Milei’s tax amnesty program, a robust sign of confidence in the libertarian president.
Longer term, Milei’s business-friendly reforms are starting to attract foreign investment commitments, particularly in the energy sector. Still, significant investment from abroad isn’t expected until Milei lifts the currency and capital controls he inherited from the previous government, something he committed to ending next year.
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