Argentina’s economy is projected to grow 4.7% in early 2025, aided by fiscal adjustments under President Milei. A significant reduction in public spending and ongoing pro-business reforms have improved investor confidence. Growth is anticipated due to increased investments and economic deregulation, despite uncertainties related to IMF negotiations and market caution.
Argentina’s economy is projected to grow by 4.7% in early 2025, following a significant fiscal and monetary adjustment implemented by Javier Milei’s administration. This adjustment, equating to 15% of GDP, aims to reverse an economic decline that saw the GDP fall by 1.6% in 2023 and 1.8% in 2024. The government aims to reduce public spending from 38% of GDP in 2023 to 32% in 2025 as part of a stricter austerity strategy.
The consulting firm Econométrica predicts continued growth, estimating a 7.1% rise in GDP from April to June 2025, potentially confirmed before October’s legislative elections. Milei’s government has focused on pro-business reforms, economic deregulation, and trade liberalization. These strategies have bolstered investor confidence and increased foreign investments, particularly in the Vaca Muerta shale oil field.
As oil production from Vaca Muerta is projected to hit 1 million barrels per day by 2030, the government has removed price caps and eased regulations to attract further investments. Companies like YPF and Vista Energy are reporting significant stock gains. However, the Argentine financial markets remain cautious due to ongoing negotiations with the IMF regarding the renewal of a $44 billion credit agreement.
Despite uncertainties surrounding this deal and a slight decline in the S&P Merval index and sovereign debt, tax revenue has seen a notable increase, supporting financial optimism. In a session of the National Congress, President Milei reiterated his commitment to economic deregulation, emphasizing a critical trade agreement with the United States and potential changes to Mercosur.
While negotiations with the IMF are in progress, Milei emphasized the need for parliament’s support in achieving a stable central bank and overcoming exchange restrictions. The economic landscape marked by a lack of crucial opposition and ongoing controversies sets the stage for future legislative battles. Following a contraction at the start of 2024, the economy rebounded with a 3.9% growth in the last quarter, driven by a strong recovery in agriculture, which surged by 80.2%. The peso has strengthened significantly against the US dollar, resulting in increased average wages, promoting improved investor sentiment and bond performance.
Argentina’s expectation for economic growth in 2025 hinges on stabilizing inflation and boosting investments, potentially achieving between 3.5% and 5.5%.
Argentina’s economic growth of 4.7% in early 2025 demonstrates the positive impact of Javier Milei’s fiscal adjustments. The anticipated growth is supported by a reduction in public spending, pro-business reforms, and increased investor confidence. Future prospects depend on continued economic deregulation, successful negotiations with the IMF, and boosted foreign investments, particularly in the energy sector. Despite existing challenges, the landscape looks optimistic for Argentina’s economy in the coming years.
Original Source: edatv.news
