Official GDP data for Argentina’s fourth quarter published by the National Institute of Statistics and Censuses on March 19 reveals that although Argentina’s economy shrank 1.7% compared to 2023, it expanded in the final quarter of 2024. This marks two consecutive quarters of growth after six quarters of contraction.
Reports indicate, however, that while economists anticipate economic growth of 4.5% for 2025, the reality of life for Argentina’s poorest remains unimproved.
Self-described anarcho-capitalist President Javier Milei has adopted a “chainsaw” approach since being elected into office in November 2023. His various austerity measures aim to reverse the country’s fiscal deficit, control inflation and reduce the role of the state in Argentina’s economy.
Commended by the American conservative magazine National Review for facilitating a “swift economic recovery,” the right-wing leader’s Milei’s strategy has included significant cuts to public spending, including public sector jobs and government subsidies; privatization of state-owned enterprises; pension reform; labor market deregulation; and cuts to welfare and social programs.
Milei has reduced real public spending by 30% and dismissed 36,000 public employees since November 2023, according to the Wall Street Journal. (For perspective, in the U.S., the Trump administration via Elon Musk’s Department of Government Efficiency, has given notice to some 30,000 federal workers).
Deregulation, which has been central to Milei’s economic vision, removes regulations that businesses or industries have to follow, allowing them to operate with less government interference.
Similar to DOGE in the U.S., upon being elected, President Milei created the Ministry of Deregulation and State Transformation, and appointed former Central Bank President Federico Sturzenegger. The minister recently claimed to the Wall Street Journal that the “ridiculous regulations” of the Argentine bureaucracy are its biggest downfall.
Milei’s government has since abolished price controls on food, rent controls on housing, deregulated the aviation market, and moved to end limits on exports, in addition to supporting privatization initiatives.
Milei succeeded in decreasing the rate of annual inflation from 211% at the beginning of his term, at which point it was the highest in the world, to 117.8% in December 2024.
Yet, Milei’s achievements have not come without significant controversy and concern, as critics question the long-term sustainability and social impact of his austerity-driven reforms.
According to a study by the Catholic University of Argentina, poverty levels have reached 57.4% of Argentina’s population as of January 2025, the highest rate in 20 years. Fifteen percent of those people are living in “destitution”.
An article published by The Guardian contains testimonies from members of Argentina’s working class and residents of some of its poorer communities who lament the increased financial difficulty they face in day-to-day life. Some challenges included the rapid increase in food prices, in particular meat prices, and increased rent. Milei’s reduction of government subsidies for gas and electricity are startling Argentina’s poorest.
Argentina’s retired population is also alleged to have suffered. Retirement pensions constituted the most affected expense by Milei’s strategy for the first 10 months of 2024 (24.2%), frustrating the pensioners that marched alongside unions and left-wing parties in last Wednesday’s turbulent protest in front of the National Congress.
Read more: Milei’s government cracks down on pensioner protests; brawl breaks out in Argentina’s Congress
Milei maintains, nonetheless, that people will see an ease in poverty rates and envisions an economic rebound as a result of his deregulation policies. He depends on the patience of the Argentinian people as he continues to implement his libertarian framework.
Featured image credit: via Free Malaysia Today https://www.freemalaysiatoday.com/category/world/2024/03/02/milei-vows-to-expedite-overhaul-for-argentina-solve-economic-woes/ , https://creativecommons.org/licenses/by/4.0/
