Just over a year and a half after the inauguration of Javier Milei, Argentina reaps economic results that are being praised around the world.
Matthew Lynn, columnist for the British newspaper The Telegraph, published in July a text that mentioned the country ruled by the Libertarian President as an example of rationality in a world of economic uncertainty.
“When will the rest of the world wake up to the Argentine miracle?” Lynn wrote.
“While France abolished bank holidays to keep the titles markets happy, while the chancellor [do Tesouro britânico] Rachel Reeves struggles to fill the latest ‘black hole’ in the country’s accounting books, and while even the US title market is concerned with Federal Reserve’s independence [Fed, o banco central americano]a country – and one very unlikely – is receiving an increase in the classification, ”said the columnist, mentioning the recent elevation of Argentina’s grade with the Moody’s risk rating agency.
Since arriving at Casa Rosada, by the end of 2023, Milei has promoted the policy of “zero deficit” cutting spending – closing or merging departments, suspending public works and cutting government subsidies for services such as light, water and public transport, among other measures – began a process of privatization of state -owned companies, reduced bureaucracy and taxes and ended the currency controls.
As a result, data collected and released by the Argentine National Institute of Statistics and Census (INDEC) have proven the Argentine performance praised by Lynn.
Inflation in the country, which had been 25.5% in the monthly variation and 211.4% in 12 months in December 2023, when Milei took office, arrived in June to 1.6% and 39.4% on two levels, respectively.
In the second half of 2024 (period with more recent indicators), the indec pointed out that the percentage of households below the poverty line in the urban areas of Argentina reached 28.6%, a drop of 13.9 percentage points over the first six months of last year.
Regarding economic growth, after two years of recession, Argentina should have a 5.5% Gross Domestic Product (GDP) increase this year, according to the International Monetary Fund (IMF). According to Indec, in the first quarter, the Argentine economy grew 5.8% compared to the same period in 2024.
In July, the institute announced that formal employees wages grew 2.4% in May, above 1.5% inflation registered in the fifth month of the year.
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In the presentation of the World Economic Panorama Study (Weo) in late July in Washington, the IMF, which recently hit the disbursement of another US $ 2 billion to Argentina as part of the background, stressed that the country should have the second largest GDP growth among the world’s 25 largest economies this year, behind only India (6.4%).
The fund released growth projections of countries with the 20 largest GDP on the planet and ten outside this track, such as Nigeria, Kazakhstan and Pakistan.
Argentina was included in the report and, according to the IMF, will have this year the 24th largest GDP in the world – Switzerland (21st), Taiwan (22nd), Belgium (23rd) and Sweden (25th), which will complete the “top 25”, were not analyzed at Weo, but, according to other studies, will have growth well below the Argentine this year.
“Our growth projections [da Argentina] For this year, 2025, they remain unchanged from April projections by 5.5%, and also unchanged for next year at 4.5%. The Argentine economy is undergoing a strong recovery. This is certainly a very welcome development, ”said IMF chief economist Pierre-Olivier Gourinchas, according to the Clarín newspaper.
The Argentine level at Weo is equal to the projected to the Philippines and is followed more closely by Kazakhstan (5%), China, Indonesia (4.8%) and Malaysia (4.5%). According to the IMF, Brazilian GDP is expected to grow 2.3% this year.
“[O crescimento na Argentina] It is driven by improvements in confidence, credit, real wages, and all as a result of a very strong, very successful misinflation process so far, with expected inflation by the end of this year in a range of about 18% to 23% per year, ”said Gourchas.
For researcher, strengthening international reserves is the next challenge
In an interview with Gazeta do PovoAllan Gallo, professor of economic sciences at Mackenzie Presbyterian University and researcher at the Mackenzie Economic Freedom Center (Mackliber), said Milei’s economic data prove that “there were important hits.”
“In my view, the main one was the commitment to fiscal adjustment. Milei faced hard resistance, but managed to reorganize public accounts and signal that the country would no longer accept to live with chronic deficits,” said the analyst.
“This tax turn has returned a degree of predictability to the Argentine economy. For the first time in many years, there was surplus, and this created a minimal basis for the resumption of general trust,” Gallo added, who stressed, however, that there are still points to be resolved.
“The labor market is still unstable, informality has grown and families’ income is still far from recovering at the same pace as the fall in inflation. Despite advances, social cost is high and this needs to be faced with more policy of productive inclusion and formalization,” said the researcher.
In Gallo’s opinion, the next most urgent challenge to be viewed by Milei management is to strengthen international reserves, as the Argentine economy is still vulnerable to external shocks and needs to be better protected.
“The plan to bring the ‘dollars under the mattress’ to formality, this money saved outside the banking system, it can be an interesting way out, but it will only work if there is an institutional confidence environment. Without that, no one will want to give up the security of the money saved at home,” said the analyst.
Regarding Milei’s affinity with Donald Trump management, Gallo said that “this can generate some diplomatic advantage that, for example, Brazil does not now have”, facilitating conversations and unlocking investments – but alone, this relationship will not be enough for Argentina.
“Again, what really attracts foreign capital is the stability of rules, predictability and confidence. Personal relationship between presidents helps, but does not replace economic foundations,” he said.
