The President of Argentina, Javier Milei, has proven that capitalism works. Argentina’s annual gross domestic product (GDP) growth in the first quarter of 2025 was 5.8 percent, which is higher than China’s. The data was revealed this week by Argentina’s National Institute of Statistics and Censuses (INDEC).
The report also reveals a 0.8 percent GDP growth compared to the last quarter of 2024, which means that Argentina’s economic growth has surpassed 5.4 percent. This is the same as China’s GDP growth in April, at a time when China was accelerating its exports before the imposition of higher tariffs under the US President Donald Trump.
Luis Caputo: “Growth amid falling inflation and record consumption”
The Argentine Minister of the Economy, Luis Caputo, explained on social media that in addition to the 5.8 percent annual growth recorded by INDEC, private consumption rose by 11.6 percent, investment by 31.8 percent and exports by 7.2 percent. He stressed that this happened “in a context of falling inflation and a return to relative prices. Without non-payments, without broken contracts and with a capitalised central bank.”
Caputo added that “seasonally adjusted private spending figures in the first quarter of 2025 were the highest ever (+0.6 percent, compared to the previous record set in the last quarter of 2017). Investment in machinery and equipment was the highest on record for the first quarter. The same applies to transport equipment. Exports were the highest for the first quarter and the third highest overall (the second highest happened in the fourth quarter of 2024).”
Neighbourhood phenomenon
President Javier Milei celebrated his successes on social media with the now-famous term “neighbourhood phenomenon”, which was used derisively by his opponents during the presidential campaign, as Milei’s libertarian movements were thought to have limited reach. Today, Milei uses the term to refer to cases where his statements, policies or meetings have an international resonance.
Natacha Izquierdo: “Businesses are planning growth again”
The Argentine economist Natacha Izquierdo explained to La Nación newspaper that GDP growth is stemming from a broad-based recovery in key economic sectors such as manufacturing, construction and trade. At the same time, service-dependent activities such as hotels and restaurants have shown “an unusual dynamic linked to the restructuring of the economy and the recovery in consumption.”
“This is not just a technical rebound, but a clear sign of a reactivation of productive capital – companies that were previously on the defensive are now making strategic decisions for growth, in anticipation of a more stable economic cycle,” she explained. She added: “Growth is not uniform and does not eliminate all weaknesses, but the data confirm that we have passed the tipping point and that the real economy is starting to pick up again.”
Shock therapy after the socialist catastrophe
Upon taking office in December 2023, President Milei implemented a series of drastic “shock therapies” to prevent a complete collapse of the Argentine economy. His predecessor, the socialist Alberto Fernández, had left the country on the brink of hyperinflation and with almost no foreign reserves.
Since then, inflation in Argentina has fallen sharply – from 25.5 percent in December 2023 to 1.5 percent in May 2025, which is the lowest rate in the last five years. Of particular significance was also the 20-billion-euro cooperation agreement with the International Monetary Fund (IMF) signed in April, under which Milei lifted most of the strict foreign exchange restrictions that had been in place for almost two decades. Argentines are now once again free to buy and trade in US dollars and other currencies without restrictions. At the time, the IMF forecast Argentine GDP growth of 5.5 percent, which is 0.3 percentage points lower than the growth already measured by INDEC.
I. K.
