Economy grew more than expected after Milei lifted controls

Argentina’s economy grew more than expected in April as President Javier Milei loosened some currency controls as part of a US$20-billion agreement with the International Monetary Fund.

Economic activity rose 1.9 percent in April from March, compared with the median estimate of 0.3 percent of analysts surveyed by Bloomberg. From a year ago, activity rose 7.7 percent in April, also surpassing expectations, according to government data published Monday.

After a harsh contraction last year at the start of Milei’s austerity drive, economic activity grew in the first two months of this year, but fell 1.9 percent in March amid market flummox just before inking the new IMF deal. The financing package was signed on April 11, and Argentina lifted significant currency and capital controls with little impact on the currency, though restrictions remain in place for businesses.

“It’s a very good data point that exceeds all expectations,” said Maria Castiglioni, director of consulting firm C&T Asesores in Buenos Aires. “In broad strokes, Argentina recovered what it lost in March, which was heavily influenced by uncertainty around what would happen with the IMF, the foreign exchange rate and capital controls.”

Argentina’s retail sector led growth in April, followed by manufacturing and finance, according to the April GDP proxy. Construction grew 17 percent on the year while the financial sector grew 28 percent amid a boom in credit. Separately, Argentina extended growth in the first quarter of the year, with consumer spending growing 2.9 percent quarter on quarter.

“We continue to see consolidation and robust growth in monthly and annual economic activity,” said Dante Ruggieri, partner at AT Inversiones, a Buenos Aires consultancy. “What was most relevant was the growth in spite of the market uncertainty up until April 11.”

An IMF technical team visited Buenos Aires last week to review the economic team’s progress so far. A staff-level agreement on the first review will be a key step before the IMF board would approve a US$2-billion disbursement as part of the programme.