Economy grows less than expected as imports surge

Argentina’s economy grew less than expected in the first quarter of 2025 as a pickup in imports along with declines in exports and government spending tempered the South American nation’s recovery.

Gross domestic product expanded 0.8 percent in first three months of the year compared with the previous quarter, far short of the 1.5 percent median estimate from analysts in a Bloomberg survey. From a year ago, Argentina’s economy grew 5.8 percent in the period from January to March, according to government data published Monday. The median estimate of economists surveyed by Bloomberg was growth of 6.1 percent.

Still, the reading marks the third straight quarter of expansion. In May, monthly inflation in Argentina slowed to a five-year record of 1.5 percent, while wholesale prices showed deflation for the first time since the pandemic.

The impressive year-on-year growth was expected, given that Argentina was in the midst of President Javier Milei’s shock therapy of austerity at the start of 2024, after an abrupt currency devaluation dented consumer spending and the libertarian president halted government expenditures.

Since then, the significant recovery of Argentine wages and expanded credit availability have boosted household consumption. Consumer spending grew 2.9 percent quarter on quarter.

Argentina reached a US$20-billion agreement with the International Monetary Fund in April, and relaxed many of its capital and currency controls. The currency now floats between bands and is freely accessible to individuals. The peso has remained stable, with some government intervention in the futures market. An IMF mission will visit Buenos Aires this week to review its performance thus far and unlock an additional US$2 billion after an initial US$12 billion disbursement.

Economists surveyed by Argentina’s central bank in May expect the economy to grow 5.2 percent in 2025.