Argentina’s Economy Defies Forecasts with Faster-than-Expected Recovery in 2024

Argentina’s economy contracted by 1.8% in 2024, according to preliminary data from the national statistics agency, INDEC.

While this marked the first year of President Javier Milei’s administration, the figure was far better than the 3.5%-4% decline predicted by international organizations like the IMF and World Bank.

The unexpected resilience reflects the rapid impact of Milei’s aggressive economic reforms, which aimed to stabilize a country plagued by hyperinflation and fiscal deficits.

Milei took office in December 2023, inheriting an economy in crisis. Inflation had reached a staggering 211%, poverty exceeded 50%, and foreign reserves were critically low.

His administration implemented a “shock therapy” approach, including drastic public spending cuts, monetary tightening, and deregulation.

These measures initially caused hardship—poverty peaked at nearly 55% by mid-2024—but they also set the stage for recovery. The turnaround became evident in the latter half of the year.

Argentina’s Economic Rebound

After contracting for three consecutive quarters, GDP grew by 3.9% in Q3 compared to Q2. December saw a remarkable 5.5% year-on-year growth, driven by sectors like financial intermediation (+18%), trade (+7.4%), and manufacturing (+6.7%).

Ten of Argentina’s sixteen economic sectors expanded by year-end, signaling broad-based recovery. Inflation fell dramatically from a monthly rate of 25.5% in December 2023 to just 2.4% by November 2024.

This disinflation boosted real wages, which began outpacing inflation by mid-year, driving a 4.6% rise in private consumption and a 12% surge in investment during Q3. For the first time in over a decade, Argentina achieved a fiscal surplus, equivalent to 0.3% of GDP.

Despite these successes, challenges remain. Construction contracted by 7.2%, reflecting reduced public infrastructure spending, while fishing plummeted by 25%.

However, rising investor confidence has fueled major projects like Rio Tinto’s $417 million (R$2.5 billion) lithium investment and a $500 million (R$3 billion) oil pipeline initiative.

Argentina’s rapid stabilization has drawn international attention as an economic success story. While social costs were high initially, Milei’s reforms have positioned the country for robust growth in 2025, with GDP expected to expand by up to 6%. The results highlight how decisive policy action can defy even the bleakest forecasts.