Argentina's economy grew in line with expectations in January

Argentina’s economy posted a slight expansion in January following a quarter of weaker-than-expected growth for President Javier Milei.

Economic activity rose 0.4 percent from December, according to government data published Thursday. From a year ago, the gross domestic product proxy grew 1.9 percent, matching the median estimate of economists surveyed by Bloomberg.

The agriculture sector led growth, while retail and manufacturing fell.

Monthly inflation, which Milei vowed to slow below one percent this year, came in closer to three percent in February and last slowed in May. It’s still a significant improvement from the crisis Milei inherited, but his disinflation campaign has lost momentum. The president’s approval rating this month hit its lowest since he took office to 36 percent, according to LatAm Pulse, a survey conducted by AtlasIntel for Bloomberg News.

“Solid Argentine activity in January put first-quarter growth on robust footing, yet continued to flag uneven strength across productive tradable sectors and most of the rest of the economy. That’s a risk for growth ahead – and for markets more immediately if that undermines political support for the current macroeconomic programme,” said Jimena Zúñiga, Argentina economist for Bloomberg Economics.

Gross domestic product rose 0.6 percent in the fourth quarter compared to the three months through September, below economists’ estimates, while the economy expanded 2.1 percent in the quarter. 

Exports led growth, followed by private consumption, as public spending and capital investment declined. Unemployment climbed to 7.5 percent in the same quarter, the highest fourth-quarter since the Covid-19 pandemic.

Economists estimate Argentina will grow 3.4 percent this year and inflation will slow to 26 percent this year, according to the Central Bank’s February survey.