After a year in office, Argentine ultra-liberal Javier Milei boasts of planets aligning, with slowed inflation, contained social conflict, and stable popular support. But a major unknown remains: which of the social impact or the economic recovery will detonate first?
– Inflation slowed
It remains one of the highest in the world at 193% inter-annual. But with “chainsaw” blows in the public accounts, dried up monetary issuance, dried up subsidies, inflation was contained to 3-4% monthly (2.7% in October) against 17% on average per year. last.
Argentinians no longer go to the supermarket with the fear of labels jumping from one week to the next. “This is an important improvement in psychological terms, in expectations of daily life. If we compare the end of 2023 to the end of 2024 (…) there is a fundamental success there,” says Gabriel Vommaro, political scientist at the San Martin University.
– Uncertainty tamed
Exchange controls maintained but a peso stabilized at the parallel exchange rate, country risk at its lowest in 5 years… And “banks which restore credit, analyze projects. What has changed is what was missing: stability, the ability to plan over time”, told AFP Alejandro Reca, CEO of a dulce de leche company (dairy jam, an emblematic product). “We are optimistic, in the process of reactivating investments that we were slowing down.”
Recovery, then? The recession (-3.5% expected at the end of 2024) “is already over and the country is starting to grow again,” insists Mr. Milei. Some indicators, such as industrial activity and retail sales, have been slowly turning green recently. But nothing that has caught up with the fall over the past year.
– Two speeds
Javier Milei boasts of achieving “the greatest (budgetary) adjustment in the history of humanity.” And to have made austerity pay for “the caste and associates”, a term designating both the establishment, the State, and any adversary.
For the moment, the nearly 180,000 lost jobs, including 33,000 in the public sector (official figures), have mostly been paid in cash. The millions of users whose transport prices have exploded with the end of subsidies: from 110 to 757 pesos (0.10 to 0.70 dollars) for a metro ticket in one year. Or 52% poor. Dated figure, disputes the executive.
“The winners are the primary sector, mining, oil, to a certain extent agriculture and the financial sector,” diagnoses Mr. Vommaro. “The losers: public sector, health, education, science, retirees (…) and trade with the fall in consumption.” “The socio-economic cost has been enormous (…) the key question is whether the costs will be temporary or lasting.”
– No one in front
A year after its dry and unexpected defeat (56%-44%), faced with the “anti-system” outsider, the Peronist opposition (center-left) still appears traumatized, incapable to this day of formulating a counter-proposal. of future.
On the contrary, she (re)presents herself as a figurehead, at the head of the Peronist party, Cristina Kirchner, 71 years old, president from 2007 to 2015, vice-president from 2019 to 2023, dominant figure for 20 years, but eminently divisive .
Same sluggishness of the unions, which apart from two general strikes (January, May), struggle, or hesitate, to mobilize en masse. Faced with a president whose stubborn polls show constant support – around 45%, or even almost 50% according to some recent ones.
– Heaven will help you
The “Forces of Heaven” that Milei invokes in her messianic moments, the sky in any case, seems to smile at her. After the historic 2022-2023 drought, which deprived Argentina, an agro-export par excellence, of some $20 billion in revenue, the first “Milei harvest” could be among the best in history, according to the sector. A windfall for a country lacking foreign exchange reserves.
– The outside too?
The IMF, to which Argentina is repaying a massive loan of 44 billion dollars, reviewed its borrowing conditions in October, with a sharp drop in interest charges.
A blessing for a chronically indebted country, whose governments have been asking for this gesture for years.
Finally, the re-election of Donald Trump gives Milei a strong ally. Even if the real impact of this “affinity” questions “Milei's ability to translate an alignment into privileged differentiated treatment”, summarizes Mariano Machado, Americas analyst at Maplecrot.
Gaining influence with the IMF? Or simply “correspondent in Argentina” of the ultraconservative international (as the media mock him) in no way sheltered from a revival of American protectionism?
