Argentina's Economy Grows by 4.7% in 2025 Thanks to Milei's Fiscal Adjustment

The Argentine economy experienced a 4.7% growth in the first quarter of 2025, according to data from Econométrica. It is expected to reach 7.1% between April and June.

This rebound is attributed to the fiscal and monetary adjustment of 15% of GDP implemented by Javier Milei's government. These measures aim to reverse the economic decline and foster an expansionary cycle.

In 2023, Argentina's GDP fell by 1.6%, followed by a 1.8% decline in 2024. During that period, public spending accounted for about 38% of GDP. For 2025, this figure is expected to decrease to 32%, reflecting a stricter austerity policy.

The consulting firm Econométrica, led by Ramiro Castiñeira, anticipates historic growth for Argentina in 2025. An expansion of 4.7% is projected between January and March and an increase of 7.1% between April and June.

This data will be confirmed in the summer, before the legislative elections in October, where Milei seeks to strengthen his parliamentary influence. Milei's government has implemented pro-business reforms, economic deregulation, and trade liberalization.

These policies have improved investor confidence and attracted foreign investments. A notable example is the Vaca Muerta field, which has increased its oil production.

Production is expected to reach 1M barrels per day by 2030. The government removed oil price caps and relaxed regulations, attracting foreign investments.

Companies like YPF and Vista Energy have experienced significant increases in their shares. Argentine financial markets show caution amid negotiations with the IMF to renew a $44 billion credit.

President Milei plans to send a bill to Congress to ratify these negotiations. The lack of details has caused uncertainty among investors. The S&P Merval index and sovereign debt have shown slight declines, reflecting this caution.

Despite these challenges, authorities reported a significant increase in tax revenue. This could sustain financial optimism in the near future.

In the opening of ordinary sessions of the National Congress, Milei reiterated his commitment to economic deregulation and the cleaning up of public accounts. He highlighted the importance of a trade agreement with the United States and mentioned the possibility of easing or exiting Mercosur.

He emphasized the need for parliamentary support for an agreement with the IMF that stabilizes the central bank and overcomes exchange restrictions. He promised to eliminate inflation and deepen cuts in the public sector.

The absence of critical opposition legislators and recent economic controversies marked the beginning of the legislative year. Negotiations for a $44 billion credit with the IMF are ongoing.

Milei's Economic Miracle

The economy contracted at the beginning of 2024, but grew by 3.9% in the fourth quarter, driven by an 80.2% rebound in agriculture. The Argentine peso strengthened by 44.2% against the US dollar, increasing average wages in dollar terms to $990.

Argentina paid $4.3 billion in debt and investor confidence increased, raising bond prices. The country signed a free trade agreement with the EU and credit ratings improved.

Economic growth of 3.5% to 5.5% is expected in 2025 as inflation stabilizes and investments increase.