Can Javier Milei Fix Argentina's Economy?

Argentina has been a case study of economic volatility for decades, defaulting on debt, suffering runaway inflation and battling poverty and currency instability. But 2025 could be a tipping point. The president, Javier Milei, has embarked on one of the most extreme economic rewrites in the country’s recent history since taking office.

His reforms are ambitious, divisive and, scholarly opinion suggests, possibly transformative. So what in the world is going on in Argentina? And can these reforms really rehabilitate an economy long racked by crisis?

Who Is Javier Milei?

Javier Milei, an economist and former TV personality, was elected president in 2023 on a libertarian, anti-establishment platform. Branding himself as a crusader against what he calls the "political caste," Milei promised to dismantle Argentina's bloated state apparatus and liberate the private sector. His most famous soundbite? “¡Viva la libertad, carajo!” (“Long live liberty, damn it!”)

Key Economic Reforms

Currency Deregulation: Ending Exchange Rate Distortion

For years, Argentina has had a dysfunctional currency system, with a wide gap between official and black-market exchange rates. Milei’s government eliminated many of the capital controls that had restricted access to foreign currency, allowing the peso to have a freer float. Although the first stop of the deregulation led to a sudden plunge of the peso, confidence in the peso started to return. By early 2025, the currency appreciated more than 44% against the U.S. dollar. This reduced the spread between the legal and illegal exchange markets, increased the profit margins for exporters, and contributed to the restoration of the foreign reserves. The reforms made Argentina more appealing to foreign investors by enhancing transparency and aligning the peso with actual market realities. But there remains a fine line to walk, an over-strong peso can erode export competitiveness without enhancements in productivity.

Austerity Measures: A Hard Reset

Javier Milei did the most immediate thing when he took office: Apply militant austerity measures that are a complete overthrow of decades in which public spending was high. His administration cut energy and transport subsidies, leading prices for utilities to surge, but easing pressure on government finances. Public sector hires were frozen, many state agencies were restructured or downsized, seeking to reduce what Milei describes as a “bloated and inefficient bureaucracy.” The actions provoked public anger and caused short-term economic hardship, including higher unemployment and a brief decline in consumption. But the reforms are also part of a solution to Argentina’s chronic deficit, and they were an important part of restoring credibility with international institutions like the I.M.F. For Milei, austerity was not only a matter of budget cuts, but also a philosophical reset, turning the economy away from dependence on the state and toward growth led by the private sector.

Combating Inflation

But perhaps the most striking change under Milei has been the dramatic fall in inflation. Argentina had been struggling with triple-digit inflation for years; inflation rates surged past 300% in 2024. By combining tight monetary policy and fiscal discipline with an end to the central bank’s printing of money to fund government deficits, inflation started to come down. Annual inflation plummeted to 117.8% by November 2024, and by January 2025, monthly inflation reached 2.2% an all-time low in three years. Both have reestablished purchasing power as well as restoring public confidence in the national currency. Though these gains are tenuous, and some economists fear stagnation if the process of disinflation proceeds too rapidly, Milei’s methods have brought the country closer to macroeconomic stability than it has been in decades.

Reviving Agriculture

One of the most immediate successes of Milei’s reforms has come in the agricultural sector, historically the backbone of Argentina’s economy. By scrapping onerous punitive export taxes and rolling back regulation that hampered international sales, the government set off a wave of productivity. In the final quarter of 2024, agricultural production rebounded more than 80 per cent, propelling national GDP growth of 3.9 per cent. Withdrawn from uncompetitive official pricing, exporters returned to global markets with renewed confidence. That resurgence didn’t only benefit agribusiness elites, it produced a ripple effect for employment, wages and regional investment in rural America. With demand for food and raw materials climbing worldwide, Milei sees agriculture as a key element in a multiyear recovery. But maintaining that momentum will take investment in infrastructure, water management and climate resilience to withstand future shocks.

Short-Term Pain, Long-Term Gain?

President Milei’s economic transformation has paid immediate and accurate dividends in stabilizing the macroeconomy with a decline in inflation, an appreciating peso, and a recovery in pivotal sectors such as agriculture. But for millions of Argentinians, this data hasn’t yet turned into immediate relief. Instead, reform’s first years have been marked by soaring living expenses, rampant job loss and a shrinking public safety net.

Scrapping energy and transport subsidies, although lightening the load on the national budget, has hit lower- and middle-income households hardest. Increasingly, families are spending a much larger share of their monthly income on electricity, gas and public transport. And the freeze and layoffs in the public sector have seen sharp increases in short-term unemployment, particularly in provincial cities where government jobs are a key source of income.

For the first time, poverty jumped to 57% in early 2024, sparking mass protests and labour strikes. But in the third quarter, data showed it down to 38.1% as inflation eased and real wages, especially in the private sector, started to recover. This implies that a number of the harshest consequences would have been transitional, as the labor market gradually adapted to the new economic model.

Social tensions remain high. A lot of Argentinians are skeptical about the “shock therapy” method, believing that they are paying for the cure while enjoying none of the benefits that are still theoretical or way in the future. The government, for its part, contends that this pain is temporary and essential to liberating the country from the cycle of inflation, currency collapse and international isolation. Milei’s own words are: “It is unavoidable to suffer today to grow tomorrow.”

On the flip side, investor confidence is for sure on the mend. Argentina’s risk premium has reduced; foreign capital is tentatively coming back and domestic entrepreneurs especially in agribusiness, fintech and energy are starting to reinvest. This creates a paradox: the nation is enticing to capital but extremely polarized at home.

Whether Argentina’s short-term suffering becomes long-term gain depends on two key factors. First, the government’s ability to maintain social cohesion and keep unrest from derailing reforms. And second, its ability to translate structural efficiency gains into inclusive growth in the form of job creation, innovation and development of infrastructure.

Argentina is in many ways balancing on a tightrope. The macroeconomic data may be headed in the right direction, but to be truly bold, Milei’s reforms must be deemed not just ambitious, but fair, too and the lived experiences of ordinary people have to get on track, as well.

What Lies Ahead?

Projections for 2025 suggest economic growth of 3.5%–5.5%, driven by renewed investor interest, macroeconomic stability, and increased exports. Inflation, while still high, is expected to continue falling throughout the year.

But the real test lies in whether Milei can maintain political stability. His reforms are divisive, and opposition within Congress remains strong. Large-scale protests have already emerged, and social tensions could threaten implementation if not managed carefully.