Although it seems impossible for a recession to be positive, the truth is that Argentina’s economy has lived a 2024 that has been much less bad than expected. The initial forecasts talked about a recession in the year (fall of GDP) that would sink the economy up to 4%. This was for example BBVA’s forecast. However, Economic activity ended last year with a contraction of ‘Solo’ 1.8%a decrease much lower than the estimated: “The real GDP contracted less than expected in 2024, with a drop of ‘only’ 1.8% year -on -year”, says the report published this week by JP Morgan in which it stands out that everything indicates that the Argentine economy will enjoy this year a solid growth and that the great risk for forecasts is that these are short.
The Argentine economy has achieved a faster and more robust recovery than expected, with a projected growth of 5.5% in 2025, according to the latest JP Morgan report. Far from any hint of recession, the country is headed for a year of strong expansion promoted by foreign trade, the recovery of consumption and normalization of economic activity after the initial adjustments of the Government of Javier Milei, which have been based on historical cuts of public spending, a strong deregulation and cleaning of the balance of the Central Bank. Now, “the risks on our growth forecast are upward inclined,” says JP Morgan, suggesting that the expansion could be even greater if the current recovery rhythm is maintained.
Not only that, this return to growth is being produced in the midst of historical disinflation (because of the rapid price growth) and a cut of unprecedented public spending. The last fact to be published in inflation was also better than waiting, with monthly growth of the prices of 2.2% in January, minimums that were not seen since the summer of 2020. The turn of the economy of Argentina continues to take shape as new data is known that come to confirm that the risk of hyperinflation, for example, seems to have dissipated.
Regarding economic activity and its good moment, it should be said that it has a lot to do with the optimism of the agents, the improvement of real wages and the good moment of the export sector. This optimistic vision is based on the solidity of the economic rebound in the last months of 2024, when GDP showed a recovery dynamics in the form of “V”, recovering in December the levels of activity prior to the crisis of mid -2023.
The latest indicators of activity estimation have once again beaten the forecasts of experts. For example, in December, the monthly Economic Activity Estimator (EMAE) showed a 5.5% increase in interannual terms, while in the de -stationalized comparison it grew by 0.5% compared to November. With these data, the Argentine economy seems to have consolidated a recovery phase after the crisis of the previous years. “The economic activity data in Argentina corroborates the closure of the V recession that started the last Kirchnerism,” says Daniel Fernández, economist and professor at Francisco Marroquín University. “Economic activity closed the year with a positive impulse, which reinforces our projections by 2025,” the US bank reinforces.
For this 2025, one of the pillars of Argentine growth will be the external sector, where the country has maintained consecutive commercial surpluses for 14 months. In January 2025, the commercial balance was positive at 100 million dollars, reflecting a slight deterioration with respect to the same month of 2024, but even showing a solid behavior that can be highlighted. “Exports grew by 9.1% year -on -year, with an increase of 12.5% in volumes,” says JP Morgan, pointing out the resilience of the productive sectors.
The surplus has remained despite the increase in imports, which rebounded 24.6% compared to the previous year for the recovery of domestic demand, the bank’s forecast by 2025 continues to show a very positive commercial balance of 14,000 million dollars. The combination of higher agricultural exports and a sustained increase in the sale of hydrocarbons and minerals will allow financing the rise of imports without compromising the stability of the balance of payments.
Export growth has been fundamental to sustaining imports. In January, exports reached 5.9 billion dollars, with an year -on -year increase of 9.1%, driven by a 12.5%growth in volumes, although prices were reduced by 2.9%. However, experts warn that the export supply could be affected by lower agricultural production compared to 2024, which would reduce sales of soybeans, corn and wheat by approximately 2,000 million dollars this year.
On the other hand, imports have shot themselves, reaching 5.7 billion dollars in Januarywhich represents an increase of 24.6% year -on -year. This increase has been promoted by the recovery of domestic demand and the elimination of the country tax on imports in December 2024. “We hope that imports will amount to about 72,000 million dollars in 2025, approximately 12,000 million more than last year,” says JP Morgan.
Still unequal growth
Although economic growth is not homogeneous, but key sectors show a forceful advance. “The manufacturing sector, construction, trade and financial intermediation lead recovery with two -digit growth rates, “says JP Morgan. Foreign investment and the greatest opening of trade are also energizing the economy, while the elimination of the PAIS Tax on imports has reduced costs for companies.
Although some sectors have not yet reached 2023 levels, the trend is clear: Argentina has left the recession with a remarkable impulse. In this context, JP Morgan expects the expansion to continue in 2026, although at a more moderate rate of 3.5%. With an economic policy that seeks to consolidate the fiscal balance and a commercial balance that continues to show solidity, the scenario for Argentina in the coming months is encouraging, with the potential to overcome even the most optimistic estimates.
On the other hand, imports have triggered, reaching 5.7 billion dollars in January, which represents an increase of 24.6% year -on -year. This increase has been driven for the recovery of domestic demand and The elimination of the country tax on imports in December 2024. “We hope that imports will amount to about 72,000 million dollars in 2025, approximately 12,000 million more than last year,” says JP Morgan.
Waiting for the IMF
To this panorama is added the expectation of a new agreement with the International Monetary Fund (IMF), which could contribute up to 20,000 million dollars to the Argentine economy. According to Bloombergentities such as UBS, Morgan Stanley and Bank of America anticipate disbursements of between 5,000 and 10,000 million dollars in 2025, which would allow strengthening the reserves of the Central Bank and advancing in the elimination of capital controls.
The Government of Javier Milei has indicated that these funds will be used to clean up the balance of the Central Bank and reduce the treasure debt with the monetary entity. “There is a potential for positive surprises in the magnitude of the agreement and in the disbursement calendar,” said Alejo Czerwonko, director of investments for emerging markets of UBS. The approach to the IMF seeks to grant more macroeconomic stability and facilitate Argentina’s return to international credit markets. “Investors are attentive to how the Milei government will use these funds and when it will eliminate exchange controls,” says Bloomberg.
Despite the challenges facing the Argentine economy, market optimism has been reflected in the recovery of sovereign bonds. After Milei’s speech before Congress, the bonds expiring in 2035 negotiated 65 cents per dollar, which shows an improvement in the perception of country risk.
The fiscal adjustment plan and macroeconomic stabilization of the Milei Administration has been well received on Wall Street, although there are still questions about the sustainability of policies in the long term. Bank of America points out that “The markets could be underestimating the possibility that Argentina accepts an additional fiscal adjustment as part of the agreement with the IMF” The international context also plays a relevant role in the economic evolution of the country. The appreciation of the Argentine peso and the greater commercial opening are promoting import flow, while the recovery of agricultural production, although moderate, will help sustain export income.
With an economy that expands with greater force of the planned, Argentina could surprise in 2025 with a growth higher than expected. The combination of a solid external sector, a rebound in productive activity and a financial support of the IMF configure a scenario that, although challenging, offers reasons for optimism.
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