Argentina-A Small Victory

A Small Victory Argentina Argentina officially emerged from recession in the third quarter of 2024, marking a significant milestone for President Javier Milei and his sweeping economic reforms that have sought to stabilize the country’s crisis-ridden economy, the Financial Times reported this week. The country’s gross domestic product (GDP) grew 3.9 percent between July and September compared with the previous quarter, according to data released Monday by Argentina’s statistics agency. This marks the first expansion of the economy since late 2023, although GDP was still 2.1 percent lower than the same period last year. Growth was driven by agriculture and mining exports, alongside a rebound in consumer spending and capital investment. Still, the manufacturing and construction sectors remain severely depressed. Milei’s austerity measures, termed radical and brutal by many Argentinians and which include deep spending cuts and deregulation, have brought inflation down from a staggering 211 percent in December 2023 while bolstering investor optimism, CNN added. On Monday, Argentina’s Merval stock index rose by seven percent, marking a 174 percent increase this year, while the risk premium on sovereign bonds fell to 677 basis points, a sharp improvement from a figure of more than 2,000 basis points when Milei took office. However, these reforms have come at a social cost, say critics: The poverty rate increased to 53 percent in the first half of this year, while unemployment has also climbed. The International Monetary Fund forecasts a 3.5 percent contraction for 2024 but predicts five percent growth next year. While the rebound signals investor confidence and improved growth prospects, economists warned that Milei’s administration must lift capital and currency controls for Argentina to achieve sustained growth. Others added that the libertarian president must also deliver lasting growth that boosts the living standards for Argentines in order for Milei’s party La Libertad Avanza to gain enough support in the mid-term elections slated for late 2025.