Milei’s Argentina has brought inflation and debt under control in one year, but at what cost? Recession, rising poverty… Will Argentinians be able to hold out until the announced return of growth?
A year after his election, ultraliberal Argentine President Javier Milei claims major successes against galloping inflation and the country’s abysmal public debt. But this economic stabilization came at a high price for the population, with a recession and exploding poverty. Is the Milei “miracle” viable in the long term?
Argentina cleaned up, “with chainsaws”
In one year of Milei’s presidency, Argentine inflation was contained around 3-4% per month, compared to an average of 17% the previous year. A result obtained by a budgetary shock of incredible violence:
- 52% devaluation of the peso
- Deep cuts in public spending
- Drying up of monetary issuance
- Removal of subsidies
Milei, a self-proclaimed follower of “anarcho-capitalism”, considers that there was “no alternative” for a state “pathologically indebted” and “despoiled by a political caste”. He prides himself on carrying out “the largest budgetary adjustment in the history of humanity”.
Recession and poverty, the other face of the “miracle”
But this extreme austerity treatment has an enormous social cost. Between job cuts in the public sector and job losses linked to the fall in activity, the country has lost 260,000 jobs in one year according to sources close to the Ministry of Labor.
Pire, poverty has jumped to more than 52% of the population in the first half of 2024, unheard of in 20 years and the end of the great crisis of 2001. The executive disputes this figure, considering it dated, but the damage is done.
Betting on future growth, a risky bet
However, Milei maintains a surprisingly stable popularity rating, almost 50% according to some polls. He promises that after an expected recession of -3.5% in 2024, Argentina will return to strong growth of 5% from 2025, when the adjustment will have borne fruit.
In the economic theory underlying this government, social costs are necessary temporary costs, which will be offset by returning growth. But this is not what Argentine history demonstrates.
Gabriel Vommaro, political scientist
Retirees, the informal sector, health, culture, education… Large sections of Argentine society are suffering. Will they be able to hold out until the promised improvement, without endangering social peace and the very sustainability of the policy pursued? This is the whole issue of the second year Milei which is opening up.
Milei, international herald of the hard right
On the international scene, Javier Milei should continue to appear as the herald of a “cultural battle” for “Western values”, alongside his ally Donald Trump, who has just been re-elected. Climate, “wokism”, “socialist peril”… The man who considers himself “one of the two most important politicians on the planet” has undoubtedly not finished making waves.
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