Argentina’s economy grew more than expected in July under Milei

Argentina’s economy posted a larger-than-expected upturn in July, a promising signal for President Javier Milei with the economy mired in its sixth recession in a decade.

Economic activity grew 1.7 percent in July from June, compared with the median estimate for 0.6 percent growth of economists surveyed by Bloomberg. From a year ago, activity fell 1.3 percent, according to government data published Wednesday.

South America’s second-biggest economy is showing incipient signs of recovery, with wage growth edging above inflation for three straight months in June and consumer spending and manufacturing showing gains in recent months.

Milei’s ability to continue lowering inflation — now hovering around four percent for four straight months — while rebooting activity is key to maintaining his approval ratings above 50 percent despite the tattered economy he inherited. Polls show Argentines are starting to worry more about unemployment than inflation, while his disapproval ratings jumped to their highest level yet this month.

Economists surveyed by Argentina’s central bank estimate gross domestic product will contract 3.7 percent in 2024, reversed by 3.5 percent growth next year. Thursday data is expected to show poverty rose above 50 percent in the first half of the year.