December 10, 2023, exactly a year ago, took office on the 13th argentinian president since the 80s, after the re-democratization of the South American country that was once the locomotive of South America and had economic indicators like Europe: the turbo-liberal Javier Milei, 54 years old, has blown the bank and defeated Peronism as an outsider, collecting 55% of the votes in the second round. A year later, what is the balance of this traumatic experiment? Milei showed up shouting “Viva la Libertad, carajo!” and is known for being the man of the “chainsaw”, that is, the drastic cuts in public spending and privatizations at full blast. The promises, despite controversies and adjustments, have been generally kept and Argentina has effectively changed course in 12 months, at least on the front of consolidation of public finances and indicators macroeconomics: I'inflation, the figure which by now had Buenos Aires proverbially at the bottom of the world rankings, has been reduced from 25% monthly in January to 2,7% in October, the latest available data.increase in public debt, which in the third quarter had reached 158% of GDP, was reduced cutting public spending by 30%, which also led Argentina to record in January this year the first primary surplus since 2012, with the improvement in accounts continuing for nine consecutive months, until October.
Argentina: With Milei the Stock Market Soars and International Confidence Grows
These results have convinced the financial community, so much so that they even received the approval of theEconomist, not to mention the Bag, With the 'S&P Merval index of Buenos Aires which has done nothing but grow in the last 12 months, more than doubling its own value and setting a record at the end of November. Milei's liberal policies have benefited large companies in particular, especially banks and energy companies: some banks have rallied by 300% under his presidency. Not only that: on Wall Street, the Global X Msci Argentina Etf, or the financial instrument that allows you to "bet" on Argentina, has superato at the end of November the 750 million dollars raised, growing by well over 600 million compared to the 104 million collected up until the moment Milei entered the Casa Rosada. The turning point was appreciated by the same International Monetary Fund, which boasts a huge credit towards Argentina of over 40 billion dollars but which in June recognized the South American country a "discount" on the repayment of 800 million dollars. The IMF itself confirmed the Argentina's GDP forecasts negative for 2024 (-3,5%), but on the other hand it predicts a 5% rebound for next year, with annual inflation falling to 62,7% from the current 230%. Morgan Stanley called the progress made in Buenos Aires "extraordinary", while according to jp morgan The country's risk index has fallen from a record 2.102 at the start of Milei's presidency to just 720 points last November.
The Price of Turbo-Liberalism: Record Privatizations, But Poverty and Inequalities on the Rise
The other great workhorse of the new Argentine course was the privatizations, or at least the closing of the taps for large state-owned companies, forced to make cuts and layoffs. In October 2024, the latest available data, the disbursement of funds from the state to public companies decreased by 67%, while in November 2023, before Milei's election, it had increased by 129%. However, these achievements come at a high social price. Although Milei's popularity is still high, his undiplomatic methods are putting in difficulties large part of the population: inflation, in fact, has also dropped thanks to a maxi devaluation of the peso, which made it virtually impossible for the poorest to buy dollars, who saw increase the cost of living, especially food and basic necessities. The new president has also completely social benefits cut, starting from the help with electricity and gas bills and from free public transport, and has not adequately adapted the minimum salary and pensions. The poverty rate has thus reached its peak since 2004: today 53% of Argentines live below the poverty line, according to Indec data, and 18% are even in a condition of extreme poverty, with difficulty in feeding themselves. In the age group between 0 and 14 years, the poverty rate is 66%. The labor and rental market has been completely liberalized, amid protests from unions and with the courts that have tried to contain the maxi Omnibus decree, which in the end, although scaled down, has passed. In response to these problems, the president is betting everything on the attractiveness of the country for foreign investors, in order to boost the economy and create jobs. Argentina could also become interesting for Italian companies, such as Enel who had already decided to leave but who should reconsider and invest in the country.
