Argentina's Economic Upswing in July Sparks Hopes of Recovery

Argentina's economic activity grew by 1.7% in July compared to June, defying expectations of a steeper yearly decline. The grain-rich nation's outlook brightens as new President Javier Milei introduces austerity measures aimed at stabilizing finances and reducing inflation, despite mixed sector performance.

Argentina's economic activity experienced a notable rise in July, marking a 1.7% increase compared to the previous month, according to official statistics released on Wednesday. This uptick has raised optimism that the economy may have bottomed out.

The South American nation saw a year-on-year decline of 1.3%, far less severe than the projected 3.9% drop. Analysts had not anticipated such a strong performance, highlighting the potential benefits of new President Javier Milei's austerity measures aimed at taming inflation and stabilizing state finances.

Economist Federico González Rouco from Empiria Consultores suggested that July could be a pivotal moment for the economy, citing wage improvements, currency appreciation, and more working days as contributing factors. However, he cast a cautious eye towards August to confirm if the positive trend persists.

Economy minister Luis Caputo celebrated the results on social media, noting that significant growth was seen in the agriculture sector, which surged by 24% year-on-year. While mining and quarrying also grew, construction, fishing, and manufacturing sectors all faced contractions.

President Milei is betting on his stringent economic policies to revive the economy and attract foreign investment, but he faces mounting public frustration as poverty levels continue to climb.

(With inputs from agencies.)