Argentina’s economy expanded less than expected in the third quarter in the face of a market sell-off and sluggish activity before the October midterm elections.
Gross domestic product rose 0.3 percent in the three months through September compared to the previous period, less than the median estimate for 0.5 percent growth among analysts surveyed by Bloomberg. From a year ago, Argentina’s economy grew 3.3 percent, also below expectations, according to government data published Tuesday.
A surge in exports drove growth during the period while consumer spending and government expenditure were mildly positive. Capital investment dropped significantly, according to the data release.
High interest rates, sluggish activity and political uncertainty highlighted the quarter. President Javier Milei’s party lost a key provincial vote by a landslide in early September, provoking a market sell-off and eventually a US$20-billion lifeline from the Trump administration. Milei pulled off a comeback in the October midterm elections, which spurred a market rally.
“Argentina’s modest third-quarter GDP gain contributes to a year of sluggish sequential growth, following a strong rebound that lasted from mid-2024 through 1Q. However, the expenditure breakdown points to an incipient, healthy process of structural adjustment after real exchange-rate appreciation had boosted domestic demand at the expense of net exports," said Jimena Zuniga, Argentina economist for Bloomberg Economics.
So far, Milei’s economic turnaround has boosted exports, bonds and investors’ overall optimism in Argentina, but it hasn’t propelled the job market, which continues to post losses. His government sent its landmark labour reform bill to Congress last week in a bid to encourage more formal hiring.
Economists surveyed by Argentina’s Central Bank project 4.4 percent growth this year, which would be among the fastest expansions in Latin America. Earlier Tuesday, Economy Minister Luis Caputo said Argentina’s GDP could grow between four percent to eight percent in 2026.
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by Patrick Gillespie, Bloomberg
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