BUENOS AIRES, Dec 16 - Argentina's economy recorded a 3.9% growth in the third quarter of 2024 compared to the previous quarter, marking its first quarter-on-quarter expansion since entering a technical recession at the end of 2023. Despite this growth, the annual GDP fell by 2.1%, continuing a downward trend for the sixth consecutive quarter.
The recent expansion follows a period of three consecutive quarterly declines. Analysts had anticipated a decline of 2.6% for the year, indicating that the actual contraction was slightly better than expected.
Under the administration of President Javier Milei, the country has experienced a severe austerity drive, leading to significant cuts in social spending and mass layoffs in the public sector. Inflation remains exceptionally high at 166%, contributing to rising poverty rates, which have surpassed 50%.
The demand side of the economy showed improvements, with quarterly increases across all components. Notably, exports grew by 3.2%, private consumption by 4.6%, public consumption by 0.7%, and gross fixed capital formation by 12% compared to the previous quarter.
However, year-on-year comparisons reveal that only exports saw growth, with a notable increase of 20.1% in the third quarter. In contrast, private consumption dropped by 3.2%, public consumption fell by 4%, and gross fixed capital formation decreased by 16.8%. The construction sector faced a significant decline of 14.9% year-on-year.
Despite the challenges, some analysts suggest there are signs of recovery, although they remain fragile. The monthly activity estimator indicated that by September, economic activity was operating 1% above December levels, yet still 0.7% below November figures prior to a significant devaluation on December 13.
Upcoming data on the monthly activity estimator for October is expected to provide further insights into the economy's trajectory.