Argentina May economic activity rises 5.0% y/y

Argentina May economic activity rises 5.0% y/y

In a significant development, Argentina's economic activity surged by 5.0% year-over-year (y/y) in May 2025, according to recent data released by the government. This robust performance comes on the heels of a series of policy adjustments and economic reforms aimed at stabilizing the country's financial landscape.

The May economic activity figure marks a substantial improvement over the previous months, with the country experiencing a sequential increase of 1.5% month-over-month (MoM). This growth is primarily driven by a strong rebound in manufacturing and construction sectors, which have shown resilience despite global economic headwinds.

The government's fiscal policy has played a crucial role in supporting this growth. The primary budget surplus forecast for 2025 stands at 1.6% of GDP, aligning with the official target [1]. The government's efforts to manage inflation and stabilize the economy have also contributed to the positive momentum, with the country's inflation forecast for 2025 revised down to 30.0% [2].

However, challenges remain. The trade surplus, which stood at USD 12.0 billion for 2025, is expected to face downside risks due to higher-than-expected imports [3]. Additionally, the current account deficit in 1Q25 is forecasted to be 1.3% of GDP, down from a surplus of 1.0% in 2024 [4]. Despite these challenges, the government remains optimistic about the country's economic trajectory.

Looking ahead, Argentina's economic policy is expected to continue focusing on fiscal consolidation, monetary stability, and structural reforms. The government's commitment to these policies, along with the recent positive economic indicators, suggests that the country is on a path towards sustainable growth.

References:
[1] https://www.itau.com.br/itaubba-pt/analises-economicas/latam
[2] https://www.itau.com.br/itaubba-pt/analises-economicas/latam
[3] https://www.itau.com.br/itaubba-pt/analises-economicas/latam
[4] https://www.itau.com.br/itaubba-pt/analises-economicas/latam