The “shock” economic plan of the Argentine president Javier Milei is working. According to the latest data published by INDEC, the National Institute of Statistics of Buenos Aires, in the second half of 2024 the poverty rate of the South American country dropped to 38.1% compared to 52.9% to which he had jumped in the first half. Furthermore, the extreme poverty passed to 8.2% has been halved compared to the 18.1% recorded in the first part of the year. A success that Milei can also claim in front of the previous center-left government that had closed its management leaving the country with a poverty rate at 41.7%.
Fight against inflation
Much of the excellent results obtained by Milei go from the success achieved in containing and reducing inflation. The growth of consumer prices fell to 118% on average in 2024 compared to 211% in 2023. The OECD provides for average inflation this year will go further until it reaches 28.4%. The monthly inflation in December 2023, at the beginning of the mandate, was 25.5%. This then collapsed at 2.4% in February 2024 and from October it was stable below 3%.
Budget policies
Another success of Milei’s economic policy was to be able to return to the state accounts of the state. In 2024 the state budget also recorded a small tax surplus after calculating interest expenditure. A austerity policy that has certainly affected economic growth but much less than what was also estimated by national and international bodies: last year the Argentine GDP decreased by 1.7%, far from -3.5% estimated by the International Monetary Fund and the -3.8% indicated by the same government. The data on the labor market are also positive, with the employees that at the end of 2024 were 78 thousand more than those of 2023. And nevertheless the cut of 37 thousand public employees imposed by the Argentine government itself.
The dangers for Argentina
The good results obtained so far do not put the country out of danger. On the one hand there is the international context and the uncertainty generated by the US President Donald Trump: Argentina is still a fragile country and the duties policy undertaken by the United States – and the inevitable consequences on the entire world economic system – are a reason for concern for the country’s economy. On the other, the stabilization plan of the Argentine economy has not yet been completed. As the sheet highlighted this week, “two connected dowels are missing: the exchange rate and the controls on capital movements”. In this regard, it is essential to find an agreement with the IMF, with which negotiations are underway for a loan of 20 billion dollars.
