With a 1.9% increase over the previous month, Argentina’s economy expanded at a faster rate than anticipated in April following President Javier Milei’s decision to relax certain currency controls, which is part of a US$20-billion agreement with the International Monetary Fund.
Following a significant contraction last year at the onset of Milei’s austerity measures, economic activity experienced growth in the initial two months of this year. However, it declined by 1.9 percent in March, coinciding with market confusion just prior to finalizing the new IMF agreement. The financing package was finalized on April 11, with Argentina removing substantial currency and capital controls, resulting in minimal effects on the currency; however, businesses continue to face certain restrictions.
“It’s a very good data point that exceeds all expectations,” stated Maria Castiglioni, director of consulting firm C&T Asesores in Buenos Aires. “In general terms, Argentina has regained what it forfeited in March, a period significantly affected by uncertainties regarding the IMF, the foreign exchange rate, and capital controls.”
In April, Argentina’s retail sector spearheaded growth, with manufacturing and finance trailing behind, as indicated by the April GDP proxy. Construction experienced a year-on-year growth of 17 percent, whereas the financial sector saw an impressive increase of 28 percent, driven by a surge in credit activity. In a separate development, Argentina recorded growth in the first quarter of the year, with consumer spending increasing by 2.9 percent on a quarter-on-quarter basis.
“We continue to observe consolidation and strong growth in both monthly and annual economic activity,” stated Dante Ruggieri, partner at AT Inversiones, a consultancy based in Buenos Aires. “The most pertinent aspect was the growth despite the prevailing market uncertainty leading up to April 11.”
Last week, a technical team from the IMF conducted a visit to Buenos Aires to assess the advancements made by the economic team to date. A staff-level agreement on the initial review will serve as a crucial milestone prior to the IMF board’s approval of a US$2-billion disbursement within the framework of the programme.
In a survey conducted by Argentina’s Central Bank in May, economists anticipate a 5.2 percent growth in the economy for the year 2025.