https://www.city-journal.org/article/argentina-president-javier-milei-economy-inflation
Just over a year ago, Javier Milei, the eccentric, chainsaw-wielding libertarian economist, won the presidency in Argentina against a backdrop of soaring inflation and rising poverty. Since taking office, Milei has aggressively pursued a free-market program of fiscal austerity and deregulation. This approach contrasts strongly with Perónism, the strongly interventionist economic ideology followed by most Argentine presidents since its namesake, Juan Perón, rose to power in 1946.
Milei’s critics, including prominent economists such as Thomas Piketty, warned that his agenda would prove catastrophic. Though Argentina still faces severe economic challenges, Milei has largely proven these doubters wrong and achieved several victories worth celebrating.
Monthly inflation has fallen sharply since Milei took office. Rising prices have been a recurring problem in Argentine history, with the government frequently turning to the central bank to print money to finance its excesses. Unlike many of his predecessors, Milei has reduced federal spending (by 28 percent) and cut the number of federal ministries in half.
This fiscal discipline has been paying off. In October 2024, Argentina achieved its first budget surplus in 12 years. Since last May, monthly inflation has stayed below 5 percent; in November, it was 2.4 percent, the lowest since July 2020.
If we annualize the data since May 2024 (that is, if we express these monthly changes as if they had lasted an entire year), we find annual inflation trending down to about 33 percent. While that is extremely high by American standards, it’s a welcome change for Argentina, which has been reeling from triple-digit inflation on a year-over-year basis since the beginning of 2023.
Austerity has not been painless, as Milei himself cautioned in his inaugural address. Slashing government spending deepened the recession that began in 2023, and poverty and unemployment have both risen. But the recession ended in the third quarter of 2024, as the economy grew at a 3.9 annual rate. Economists now forecast that Argentina’s economy will expand 4.2 percent in 2025.