Argentina’s economy expanded 4.4% in 2025, bouncing back from the contraction that marked President Javier Milei’s turbulent first year. The headline number, released Tuesday by the national statistics bureau INDEC, tells a story of macroeconomic stabilization — and of an industrial base buckling under the weight of the reforms that made it possible.
A Recovery Driven by Grain, Not Factories
The rebound was narrower than it looked. Agriculture surged 32.2% year-on-year in December, propelled by a record wheat harvest that exceeded the five-season average by 50%. Financial intermediation added another 14.1%, reflecting improved credit conditions as currency stabilization reduced hedging costs. Together, those two sectors contributed 2.4 percentage points of the total growth. Mining and quarrying also performed well, closing the year up 8%.
But four sectors contracted: manufacturing fell 3.9%, extending six consecutive months of decline; retail trade dropped 1.3%; and hospitality slid 1.5%, reflecting persistent constraints on household purchasing power. The economy had actually slipped into negative territory in November before a strong December — up 3.5% year-on-year and 1.8% month-on-month — salvaged the annual figure.
The result still fell short of the government’s 5% projection and the IMF’s 4.5% forecast. Milei was defiant. “The prophets of chaos are not going to like this data,” he wrote on X. “Argentina advances.”
The Macro Wins
By the broadest measures, Milei’s shock therapy has delivered. Inflation collapsed from 211% in 2023 to 31.5% last year — the lowest in eight years. The government posted consecutive fiscal surpluses for the first time since 2008, a radical reversal from the 2.9% deficit inherited from the Kirchnerist administration. Poverty, which spiked to 53% in the first half of 2024 after Milei’s initial peso devaluation, has since fallen to around 32%, the lowest since 2018. In December, Congress approved the first Milei-authored budget, projecting 5% growth for 2026. The IMF is more conservative, forecasting 4% for both 2026 and 2027.
The Social Ledger
The other side of the balance sheet is harder to celebrate. Official data from the Superintendency of Occupational Risks shows that nearly 22,000 registered employers have closed since November 2023, a pace of roughly 30 per day, while about 290,000 formal jobs have vanished. The import liberalization that helped tame consumer prices has devastated domestic manufacturers. Last week, FATE, the only fully Argentine-owned tire maker, announced it would shut down production after 80 years, unable to compete with cheaper Asian imports.
Economist Pablo Tigani called the growth figures “an illusion,” pointing to a controlled exchange rate, rising public debt, declining consumption and the first drop in foreign direct investment in 23 years. Labor informality still exceeds 43%, affecting some nine million workers.
Reform Momentum
Milei is betting that the pain is temporary and the structural gains permanent. Emboldened by his party’s midterm election victory in October, he pushed his landmark labor modernization bill through both chambers of Congress and expects to sign it into law this Friday. The reform loosens hiring and firing rules, extends maximum working hours and curbs strike protections — changes the government says will formalize millions of off-the-books workers. Unions staged a general strike in protest. On March 1, Milei will deliver his annual address to Congress and outline his next round of measures. For the millions of Argentines navigating the gap between improving macro indicators and a shrinking industrial job market, that speech cannot come soon enough.