According to a recent Reuters poll, Argentina’s economy is expected to have contracted by 1.4% year-over-year in the second quarter of 2024, marking the fifth consecutive decline and deepening the country’s recession. This follows a 5.1% contraction in the first quarter, underscoring the ongoing economic struggles under President Javier Milei’s stringent austerity policies.
The anticipated figures reflect the impact of Milei’s aggressive cost-cutting measures, which have been aimed at curbing the country’s triple-digit inflation, rebuilding foreign reserves, and addressing years of significant fiscal deficits. While these policies are intended to stabilize the economy, they have also exacerbated poverty and unemployment, straining household finances and dampening economic activity.
Despite the challenging conditions, some analysts suggest that the recession might be nearing its end. Marcelo Rojas, an economist, noted that while the economy remains in recession, recent indicators suggest that the downturn may be bottoming out. “GDP has a lot of room to grow, but new capital will be needed to generate momentum,” Rojas explained.
Sector performance varies significantly. The agricultural sector, along with oil and gas from the Vaca Muerta shale region, has shown robust recovery, contrasting sharply with weaker performance in construction and consumer spending. Pablo Besmedrisnik from consultancy VDC highlighted that while agriculture, energy, and mining are recovering well, sectors like construction and financial intermediation continue to face substantial declines.
Inflation has moderated from around 25% in December 2023 to approximately 4% in recent months, though it remains exceedingly high at over 250% annually. The Argentine government aims to significantly reduce inflation by the end of the year. The government’s new 2025 budget, unveiled this week, targets a 5% GDP growth for the coming year, signaling a possible shift towards economic recovery.
Official GDP data for the second quarter will be released on Wednesday, providing a clearer picture of the country’s economic trajectory.
