Argentina’s economy experienced a significant boost in the fourth quarter of 2024. The latest data published by INDEC just hours ago revealed a quarterly growth rate of 1.4%, an annual growth of 2.1%, and an annualized expansion rate of 5.7%. These figures surpassed expert and market expectations, which had forecasted an annualized growth rate between 4.7% and 5.5%. This positive data continues the recovery that began in the third quarter, marking a turning point in the country’s economic trajectory.
Despite initial forecasts predicting a 3% recession, Argentina’s GDP in 2024 contracted by only 1.7%. Additionally, key economic components such as consumption and investment have returned to pre-Javier Milei levels, suggesting a robust recovery that has arrived sooner than expected. This recovery has occurred amid an ambitious austerity plan and legislative transformations, which were initially feared to cause a prolonged recession before stabilizing the economy.
Experts Weigh In on Argentina’s Economic Performance
Juan Ramón Rallo, an economist and university professor, emphasized the strength of the latest GDP data on social media platform X: “The economy grew 1.4% quarter-on-quarter (equivalent to 5.7% annualized). The GDP of Q4 2024 was 2.1% higher than in Q4 2023. In other words, Argentina’s economy is already generating more wealth than before Milei took office.” This is a crucial milestone, as Argentina had suffered a steep decline in the first two quarters of 2024. The ability to close the year with a 2.1% annual growth rate underscores the nation’s powerful economic rebound.
Argentina’s quarterly GDP growth of 1.4% nearly doubles Spain’s growth of 0.8%, the leading economy in the Eurozone. Daniel Fernández, an economics professor at Universidad Francisco Marroquín, echoed Rallo’s sentiment, stating, “Argentina’s GDP is back on the rise in Q4 2024, as concerns about Milei’s macroeconomic policies fade.”
The government’s austerity measures have resulted in a historic 5% GDP reduction in public spending, coupled with significant deregulations and public sector downsizing. While such measures are expected to drive sustainable growth and lower inflation in the long run, they were anticipated to have a more immediate negative impact on GDP.
Economic Indicators Show Strength Across the Board
In Q4 2024, Argentina’s imports of goods and services surged by 12.9% compared to the previous quarter, driven by a strong recovery in domestic demand due to rising real wages. Exports also grew by 7.7%, while gross fixed capital formation increased by 11.3%. Private consumption advanced by 3.2%, marking a substantial rebound.
A report from consulting firm Invecq highlighted Argentina’s V-shaped recovery from the recession, which reached its lowest point in April 2024. The GDP has now significantly surpassed Q4 2023 levels, when Javier Milei assumed office and began implementing his economic agenda. This resurgence has been primarily fueled by the agricultural sector, which recovered from the severe drought of 2023 despite lower commodity prices. According to INDEC, agricultural output rose by 31.3%, demonstrating the sector’s vital role in the country’s economic recovery.
Consumption and Investment Make a Strong Comeback
On the demand side, both consumption and investment have seen remarkable improvements after experiencing severe downturns in previous quarters.
Fixed capital formation had suffered a steep decline of over 10% by the end of 2023 and continued falling during Milei’s early months in office. However, in Q4 2024, fixed capital investment emerged as the primary driver of economic growth, increasing by an impressive 11% from the previous quarter—a continuation of the double-digit growth observed in the prior quarter.
Private consumption has also made a full recovery. According to Fernández, one of the main criticisms during Milei’s early tenure was the decline in consumption. “Although consumption had been falling throughout 2023, media scrutiny focused solely on Milei’s administration in the first two quarters of 2024. However, in the last two quarters of the year, private consumption grew by more than 7% in real terms, bringing it above year-ago levels,” he explained.
The fourth quarter’s GDP was also higher than in Q3 2023, when government stimulus programs were in full effect. Private consumption rose by 3.2% quarter-on-quarter and was 2.8% higher than in Q4 2023.
A Promising Outlook for Argentina’s Economy
Economist Juan Ramón Rallo highlighted the significance of these consumption trends: “Argentinians spent more on consumption in Q4 2024 than in both Q3 and Q4 2023. Yet, inflation was significantly lower in Q4 2024 than in the same quarters of 2023. This contradicts the theory that inflation declines solely due to consumption contraction.”
Investment growth also stood out, with an 11.3% increase from the previous quarter, which translates to an annualized rate of 53.4%. This figure is now above late 2023 levels, reinforcing the strength of Argentina’s economic recovery.
As Argentina moves forward, these data points suggest that the country’s economy is stabilizing and gaining momentum. While challenges remain, particularly in sustaining this level of growth, the fourth quarter of 2024 has demonstrated that Argentina is on a path toward economic resilience and prosperity.