Argentina's Economic Outlook

By Hernan Nessi
BUENOS AIRES (Reuters) – Argentina's economy is projected to have contracted by 2.6% in the third quarter of 2024 compared to a year earlier, marking the sixth consecutive decline. However, there was positive growth compared to the previous quarter, indicating a break from a technical recession that began at the end of the previous year.

A Reuters poll conducted on Thursday with 13 local and foreign analysts indicated this year-on-year contraction in gross domestic product (GDP), following a 1.7% contraction in the second quarter and a steep 5.1% drop in the first.

Economic activity, a preliminary indicator of growth, declined by 3.3% year-on-year in September, 3.7% in August, and 1% in July, as reported by the INDEC statistics agency. This downturn has been attributed to a harsh austerity program led by libertarian President Javier Milei.

Milei's administration has significantly reduced social spending and initiated mass public sector layoffs. Despite one of the world's highest annual inflation rates decreasing to 166%, the economy continues to slow down, with poverty rates exceeding 50%.

While the government has received praise for stabilizing state finances after years of excessive spending, revitalizing the economy remains a critical test for Milei's reforms and his enduring popularity.

Eugenio Mari, chief economist at Fundación Libertad y Progreso, predicts the economy could grow about 3% from the previous quarter, ending a streak of three consecutive quarterly declines signaling a technical recession. "Let's hope this trend consolidates in 2025," Mari commented.

The government anticipates a 5% GDP growth in its draft budget for the next year. INDEC is expected to release the third-quarter GDP data on Monday.