Argentina’s economy contracts by 5.1% in the first quarter of the year

Demonstrators clashed with riot police near the National Congress in Buenos Aires on June 12, 2024, in the midst of growing unrest in Argentina.

The country’s economy, already struggling due to austerity measures, contracted by 5.1 percent in the first quarter, according to the national statistics agency. This decline was primarily driven by slowdowns in the construction and manufacturing industries.

President Javier Milei, who took office in December, halted all new public works projects as part of his effort to reduce spending. This led to a 19 percent decline in the construction sector and a 13.7 percent contraction in manufacturing. The only sector showing growth was exports, which increased by 26.1 percent year on year.

Milei, a self-described “anarcho-capitalist,” has been focused on cutting government spending and reining in inflation, which reached 4.2 percent in May, its lowest level in two and a half years. His measures, including cutting the cabinet in half, slashing public jobs, removing fuel and transport subsidies, and devaluing the peso, have had a significant impact on the economy.

However, analysts warn that these gains may not be sustainable, as many citizens are struggling to make ends meet. The unemployment rate has also risen, with 7.7 percent of the working population unemployed, an increase of 0.8 percentage points from the previous year.

Despite Milei’s efforts, the International Monetary Fund predicts that Argentina’s economy will contract by 2.8 percent this year, following a 1.6 percent decline in 2023. Milei, who is currently visiting the Czech Republic, has called his administration’s fiscal adjustments the largest in Argentine history and in humanity as a whole.