Argentina's economy expanded 5.8% y/y in the first quarter of 2025, marking the second consecutive quarter of growth and the strongest performance since 2022, according to official data from the National Institute of Statistics and Census (Indec) cited by Reuters.

The quarterly growth of 0.8% compared to Q4 2024 signals a sustained recovery from last year's recession, though economic headwinds persist. Financial intermediation led sectoral growth at 27.2%, followed by fishing (11.6%) and hotels and restaurants (9%). Mining and quarrying (+6.6%), construction (+6.1%), and manufacturing (+5.1%) also posted solid gains.

However, some sectors contracted, including private households with domestic service (-2.2%), public administration (-1.2%), and health and social work (-0.6%), reflecting the impact of President Javier Milei's aggressive spending cuts.

Private consumption rose 2.9%, while gross fixed capital formation surged 9.8% quarterly and an impressive 31.8% annually, indicating renewed business confidence and investment activity.

The positive GDP data comes as inflation hit a five-year low in May, providing additional momentum for Milei's sweeping economic agenda. These twin achievements of growth recovery and inflation control represent significant political capital for the libertarian president as his right-wing La Libertad Avanza party prepares for crucial midterm elections.

This economic turnaround gives a boost to Milei's controversial austerity measures and market-oriented reforms, potentially strengthening his political position despite ongoing social tensions. However, sustaining this growth trajectory while maintaining fiscal discipline will be critical for cementing Argentina's economic recovery and Milei's electoral prospects.