Two Years of Javier Milei

Argentina’s President Javier Milei is on track to make economic history in a country shedding the trauma of socialism after decades of stagnation. Ironically, the paths of Argentina and Germany may soon intersect.

Javier Milei has now been in office for two years. It is an economically fascinating experiment. The man from Buenos Aires, internationally notorious for his dramatic chainsaw imagery, is conducting a libertarian experiment on a living country.

Milei is implementing what he long advocated during his campaign: the oversized state sector, with its vampiric bureaucracy, extracts the lifeblood of the private economy; socialism is, for him, a societal disease. Looking at European climate socialism, one must admit he has a point -- without exception.

Milei turned words into action -- a politician who keeps his promises, something that today in Germany seems more fairy tale than reality. He reduced the federal bureaucracy under his presidential control. Ministries were eliminated without replacement, over 50,000 public sector employees were fired -- Milei imposed abrupt, short-term but necessary social pain to escape the growth trap.

At the same time, he consolidated the country’s perennial deficit budget, which had become a kind of self-service socialist poison kitchen under Peronist rule. Early in his presidency, he achieved a primary surplus, which this year is expected to reach around 0.3% of GDP. This builds confidence in bond markets and signals to international investors: we pursue credible policies and keep our word. Argentina is open for investment.

Milei also gradually brought inflation under control, from about 212% to below 25% in two years. There is still work to be done, but his market-oriented reforms, deregulation, and massive private sector investments -- up a remarkable 30% this year from a low base -- will further stabilize prices.

According to Grok, the 2026 outlook for Argentina will be pretty bright.

### Argentina’s Economic Outlook for 2025-2026

As of late December 2025, Argentina’s economy under President Javier Milei is in a strong recovery phase following the deep recession and hyperinflation challenges of 2023-2024. Milei’s austerity measures, fiscal consolidation, deregulation, and a new IMF-supported program have stabilized key metrics: inflation has sharply declined, fiscal surpluses have been achieved for the first time in years, and economic activity has rebounded robustly in 2025.

#### Key Indicators and Projections
- **GDP Growth**:
- 2025: Consensus around **4-5%** growth, with estimates from OECD (4.2%), BBVA Research (4.5%), Allianz Trade (4.4%), and IMF (4.5%). Some earlier forecasts were higher (5-5.5%), but recent data reflects solid quarterly gains (e.g., 0.3% q-o-q in Q3 2025).

- 2026: Projections range from **3-4%**, with OECD (3%), BBVA (3%), Allianz (3.5%), and government targets around 5% (more optimistic). Growth is driven by private consumption, investment (boosted by lifted capital controls), exports (energy, mining, agriculture from Vaca Muerta and bumper harvests), and improving real wages.

- **Inflation**:
- Annual rate has fallen dramatically from over 200% in 2023 to around **31-42%** in 2025 (OECD projects 41.7%; monthly rates ~2-3% recently).

- 2026: Expected to drop further to **16-20%** (OECD 17.6%, Allianz 16-20%), supported by fiscal discipline, positive real interest rates, and lower import costs.

- **Fiscal Balance**:
- Argentina achieved fiscal surpluses in 2024-2025 (primary surplus ~1-1.6% of GDP projected for 2025), a major shift from chronic deficits. The 2026 budget targets continued prudence (primary surplus ~1.5%).

- **Poverty and Social Indicators**:
- Poverty peaked at over 50% in early 2024 but has declined significantly to **~31-39%** by mid/late 2025, thanks to falling inflation, recovering real wages, and targeted social aid. Further reductions are expected with sustained growth.

- **Other Positive Developments**:
- Trade surplus remains strong despite rising imports.
- Net public debt ~48% of GDP, manageable with growth.
- Reserves rebuilding (supported by IMF’s $20bn facility approved in 2025).

- Midterm elections in October 2025 reaffirmed support for reforms, boosting confidence.

#### Risks and Challenges
- Lingering vulnerabilities: Low reserves, exchange rate volatility, and dependence on commodity exports.
- Global factors: Trade tensions and potential U.S. tariffs could impact, though Argentina’s exposure is limited.
- Social costs: Initial austerity raised poverty temporarily, but recovery is alleviating this.

Overall, reputable sources like OECD, IMF, BBVA, and Deloitte describe a “strong recovery underway,” with 2025 marking robust rebound and 2026 consolidating gains. The government is more optimistic (5%+ growth in 2026), while international bodies are cautiously positive, emphasizing the need for sustained reforms. Argentina is poised for its strongest multi-year performance in decades if stability holds.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.