BUENOS AIRES, May 20, 2025 (AP) — Argentina's economy grew 1.2% in the first quarter of 2025 compared with the previous quarter, the national statistics agency INDEC reported Friday, marking the first quarter of expansion since early 2022 and a symbolic milestone for President Javier Milei's austerity-heavy stabilization program, which has prioritized inflation control over growth for 16 months.

The growth figure, which exceeded the 0.8% consensus forecast in a Reuters poll of 14 economists, was driven by a rebound in agriculture and manufacturing output after the 2024 recession, which saw GDP contract by an estimated 1.8% for the full year — the third consecutive year of negative or flat growth.

"Argentina is no longer shrinking. It is growing," Milei declared at a rally in Rosario, where he celebrated his 500th day in office before a crowd of 15,000 supporters. "The chainsaw was necessary to stop the bleeding. Now the patient is standing up. The vultures who bet against Argentina are losing."

The first-quarter data showed agriculture growing 4.7% quarter-on-quarter as the 2024-2025 soy harvest came in at 49.8 million tonnes, recovering from drought-depleted levels and generating $8.2 billion in export revenue. Manufacturing expanded 1.9%, led by food processing and automotive parts, while construction — which had collapsed 18% in 2024 — posted a modest 0.4% gain as infrastructure projects in Vaca Muerta and Buenos Aires resumed.

Services, which account for roughly 60% of GDP, grew 0.8%, suggesting consumer demand is beginning to stabilize after 18 months of compression. Retail sales volumes rose 2.1% in March compared with February, the strongest monthly gain since 2021, driven by appliance and electronics purchases as consumers anticipated the removal of price controls.

Economists cautioned that the recovery remains fragile and narrowly based. Year-on-year, GDP was still down 0.3% from the first quarter of 2024, and per-capita output remains well below 2017 levels. The unemployment rate ticked up to 7.4% in the first quarter from 6.8% a year earlier, as austerity-driven public sector layoffs — estimated at 45,000 positions since Milei took office — offset private sector hiring.

Former Central Bank president Martín Redrado said one quarter of growth doesn't make a trend. Milei stopped the bleeding, which is a genuine achievement. But sustained growth requires investment, and investment requires confidence that the rules won't change after October's elections.

The Central Bank reported gross international reserves of $31.2 billion at the end of April, up from $24.1 billion when Milei took office and the highest since 2019. The fiscal primary surplus reached 0.4% of GDP in the first quarter, meeting IMF targets for the third consecutive quarter.

The government has set a 2.5% GDP growth target for 2025, a figure the IMF considers optimistic given Argentina's history of boom-bust cycles and external financing constraints. The Fund's latest World Economic Outlook, published in April, projected 1.8% growth for Argentina this year, with a warning that "recovery remains vulnerable to external shocks and domestic political uncertainty."