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Inflation

Inflation was the foremost largest issue dominating contemporary Argentinian politics, as it began spiralling out of control during and some time after the elections of 2023. Milei, convinced that the peronist establishment largely caused the economic crisis, made it his main objective during the first year of his presidency to stop the situation from getting worse through anti-inflationary economic policies, and to diminish the influence of peronism. Annual inflation stood at 254.2% in the first month of Milei's term, and reached a peak of 300% in May 2024 before it stifled. It continued to fall to 55.9%, its lowest level in 3 years , by March of 2025. This decrease in the rate of inflation was driven primarily by the Government's elimination of deficit spending, leading to a decrease in monetary expansion. Milei's removal of capital controls in order to let the Peso float. As Milei continued with eliminating the capital controls, a trend of increased inflation was to be expected. FMyA, an economics consultancy, expects a further rise to 5% monthly before going back down to stable rates. Defying expectations, inflation had apparently slowed down in April to 2.8%, against the predictions of most economists and analysts of the post-cepo situation.

In 2024, the Argentinian peso appreciated by 44.2% against the dollar, outperforming all other currencies.

Wages, along with purchasing power in Argentina began falling in October 2023, before Milei was elected and inaugurated as president. By the start of his presidency, real wages fell by more than 20%. In October 2024, both CEPA and INDEC reported that private sector wages had returned and slightly exceeded october 2023 levels. However, public sector incomes remained 14.8% lower, and informal workers were still down 21.3%.

Reforms

During his campaign and throughout his presidency, Javier Milei has said several times that the reforms he plans to enact are "painful", but "necessary", contending that its the only way. "There is no alternative to a shock adjustment,” Milei said during his inauguration. “There is no money.” Throughout Milei's presidency, his reforms and bills have been repeatedly contested by the established parties in the Argentine congress due to Milei's party being in the minority. The peronist opposition parties in particular rallied heavily against his bills, as Milei's proposed policies were antithetical to their ideology. In June 2024, Milei was able to pass his tax and 'omnibus' bill. The bill, aimed at deregulating and reforming several sectors and state owned enterprises in Argentina, also included reforms concerning labour, commerce and real estate and various social programmes such as healthcare. The bill was introduced in February, however, after facing rejection and opposition, a modified form was again reintroduced in late April, reducing the number of articles from over 600 to 232. During the vote and deliberations, some articles, such as the privatization of the state owned airlines were also rejected. Some union workers and leaders, fearing a reduction of their power and thus facing the risk of falling wages, strongly protested outside the chambers. Eventually, following an 11 hour debate and after a 36-36 tie, Vice President Victoria Villarruel, the head of the chamber, cast the decisive vote.

Starting in 2011, the country consistently ran a budget deficit. Milei achieved a budget surplus within the first few months in office by reforming the Argentinian tax agency, gutting chunks of the government structure and downsizing it drastically and reducing the salaries of high ranking authorities, leading to a reduction of government spending by 30%. The ministry of infrastructure, secretariat of science & technology, and the secretariat of education in particular saw most or almost all of their funding disappear, along with major cuts to pensions. The funding for the office of the Presidency was also cut by 13.3%. However, Rent had "dropped by 40 percent in real term, and the supply of rental properties in Buenos Aires has increased by over 300 percent..." as a result of Milei abolishing all forms of rent control. In July 2024, Milei set up the Ministry of Deregulation and State Transformation, to assist the government in matters related to deregulation, reform, and modernization of the Argentine state. Milei's reforms led to a temporary decline in the manufacturing sector before the activity surged higher than 2023.

Poverty

The opposition has criticized Milei's policies to reverse hyperinflation as leading to increased poverty. During the first six months of his presidency, poverty rates increased by over 11 percentage points, from 41.7% to 52.9%, briefly peaking at 57.4% at the end of January 2024. According to INDEC, poverty rates plummeted to 38.1% during the third quarter of 2024. Furthermore, extreme poverty also seems to be declining, from being registered at 20.2% in the first quarter, 16% in the second, and 8.6% in the third. This figure has been calculated by the Argentine government agency, the National Institute of Statistics and Census of Argentina (INDEC), which is run by a peronist economist, Marco Lavagna. Conversely, alternative organizations such as the Catholic University of Argentina estimated poverty for the same quarter as 41.6%, adjusted for the reduced consumption rates as well as rising healthcare costs. Torcuato Di Tella University measured poverty at 36.8%. According to the UFM, poverty in the 4th trimester 2024 is down 37.9%, whilst extreme poverty is down 7.2%, both lower than the T3 2022 measure.^[1]

International trade and payments

In June, during a meeting in Berlin, Milei and German chancellor Olaf Scholz expressed support for a free trade agreement between the EU and Mercosur. An agreement on the free trade deal was announced on 6 December 2024. Argentina's dollar-denominated international bonds have also reached new highs in March, fueled by investor's bets that Milei's transformation policies will succeed.

The president's actions have led to Argentina regaining a favourable relation with the IMF after having been in a precarious position for almost 2 years, securing a 20 billion dollar loan. Since July 2022, the country has consistently kept a risk assessment of over 2000 points, well above the continental average of 250 points, marking significant volatility and lack of trust in the market. Since Milei's victory, the risk assessment trended downward, falling below 500 points for the first time since 2018. The loan is set to be used to disintegrate the remaining capital controls on the peso, as well as aiding the government in building up reserves, which had been exhausted prior to his presidency. J. P. Morgan has commented that "The policy advancements represent a significant step forward, enabling the country to unlock a potential that has been stifled for decades due to poor policy-making.". Argentina is the IMF's largest debtor country.

GDP

In the first and second quarter of 2024, Argentina's GDP contracted substantially, but mostly recovered in the third quarter, and set to grow substantially in the year following it. The financial improvements seen in the 3rd quarter of 2024 are complemented by society's renewed confidence in the government, creating a positive outlook for 2025. Moody's have increased Argentina's rating from 'Ca' to 'Caa3' due to the reforms initiated by President Milei.