Argentina’s economy surprised positively in the fourth quarter of 2024, posting quarter-on-quarter growth of 1.4%, year-on-year growth of 2.1% and annualized growth of 5.7%, exceeding market expectations.
These data indicate a faster-than-expected recovery after a downturn in GDP at the beginning of the year.
Moreover, the annual result shows a contraction of 1.7%, much lower than the 3% initially projected, which confirms the partial success of the economic adjustment implemented by Javier Milei’s government.
According to these data, Argentina is already generating more wealth than before Milei’s arrival to power, despite the austerity measures implemented.
At the same time, the negative impact of public spending cuts has not been as severe as feared a year ago, despite affecting some sectors.
The economy has reacted better than expected, with signs of stability in key sectors.
The performance of foreign trade has been crucial in this recovery. Imports grew by 12.9% due to the increase in domestic demand and the improvement in real wages, while exports rose by 7.7%. Fixed capital investment also showed a strong advance of 11.3%, and private consumption rose by 3.2%, a sign that economic confidence is returning.
One of the main drivers of this recovery has been the agricultural sector, which rebounded after the severe drought of 2023. Agricultural production grew by 31.3%, which boosted GDP growth significantly. Despite the fall in commodity prices, the sector managed to contribute forcefully to the expansion of the economy, showing its weight in the country’s productive structure.
Consumption and investment, which had fallen drastically in the first months of 2024, have shown a robust recovery. Fixed capital investment, which had fallen by 10% in previous quarters, has rebounded with two consecutive quarters of growth of more than 10%. Likewise, private consumption has grown by more than 7% in the last two quarters, reversing the previous negative trend and placing it above the level of a year ago.
In conclusion, the Argentine economy has managed to emerge from the V-shaped recession, with robust growth driven by consumption, investment and the agricultural sector. Despite the challenges facing the country, the data suggest that the economic adjustment has not generated the prolonged stagnation that was feared and that, on the contrary, economic activity is showing signs of dynamism. If this trend is maintained, Argentina could consolidate a sustained recovery by 2025.
