Argentina’s economic growth has suffered a major setback. It contracted by 2,6% during the third quarter 2024 compared with the same time period last year.
It is an important milestone, as it marks the sixth quarter in a row that Gross Domestic Product has declined year on year. This paints a grim picture of stagnation.
But despite the dismal results, an interesting development has occurred: The GDP of the country increased by 3 % over the last quarter.
This change is a positive sign that the economic recession has ended.
The current situation is a complex, mixed one. It also depicts a battle that continues against deep-seated economic problems.
New figures released by the INDEC statistical agency in assessing economic conditions show a pattern of consistent decline.
In particular, the economic activity declined by 3,3% on an annual basis in September. It also fell by 3.7% in august and only 1% in 2024.
Even though the government has been working to stabilize the economy and redirect its trajectory, the economy of Argentina is clearly in a state of inertia towards recession.
Javier Milei’s administration, its effects
The government of libertarian president Javier Milei took many radical and severe measures to cut public spending. They also pursued a controversial plan that would result in mass layoffs within the public sector.
These measures were intended to lower inflation and improve public finances. However, the economic activity in many sectors has been significantly reduced.
In spite of these measures, Argentina has now one of the highest rates in the world, with an incredible 166%.
These austerity measures have had severe consequences, with poverty rates currently exceeding an alarming 50 percent.
The complex situation raises questions about the long-term viability of Milei’s reforms.
Milei’s administration, however, has been given some credit for the efforts it made to reform state finances that have long suffered from unsustainable and widespread public spending.
The ultimate success of the changes depends on the ability of the government to positively and successfully revive Argentina’s struggling economic system.
Future expectations: Is there light at the other end?
Eugenio Mara, economist and head of Fundacion Libertad y Progreso believes that a 3% expected increase in the GDP for the previous quarter could indicate that a trend towards recovery in 2025.
Mari told Reuters that she hoped the trend would continue in 2025, a ray light on an otherwise dark economic landscape.
The estimates show the potential growth and durability that can occur if conditions become favorable.
As evidenced in the government’s draft budget for next year, the aggressive goal of 5% growth GDP is set for 2025.
But achieving this goal will not be easy, particularly in the current climate of increased social and market pressures.
In order to move forward, we will need not only a prudent approach to economic management, but also an effective strategy that can win back the confidence of citizens as well as investors.
Investment and confidence are important
For any economic recovery, the confidence of investors and residents in government policies and governance will be critical.
Although Milei’s administration took strong measures to deal with the current crisis it will be crucial to prevent the country from falling into recession that the implementation of long-term, effective reforms.
It is imperative to address the rising rates of poverty and create more jobs. Any delays to encourage economic recovery could have serious consequences on society as a entire and increase social unhappiness.
Argentina’s economy is still hampered, despite the fact that it has made significant progress in terms of restoring its public finances.
The authorities face a difficult task in striking the delicate balance of enforcing necessary austerity and encouraging incentives to support growth and investments.
For long-term stability and success, it is crucial to create an environment which encourages the growth of firms as well as improves living conditions for ordinary citizens.
Argentinian Economy: A mosaic of Contradictions and Challenges
Argentina’s economic situation is complex, with many contrasts.
The year-onyear decline in GDP may be troubling, but the indicators of growth recorded during the last quarter are a good indication that a possible rebound is on the way.
The government of President Javier Milei faces many challenges, both in terms of managing the economic complexity and in alleviating socioeconomic conditions that affect the population.
It may not be easy to recover, but with commitment, a long-term view, and caution it can still be done.
Updates may alter the post Argentina’s Economy Contracts 2.6% In Q3 2024 But Shows Signs of Recovery.
