Heading towards its third year under its libertarian President Javier Milei – formerly a football player, musician, and free-market economist – Argentina can be cautiously optimistic that it is turning an economic corner.

Argentina, which in the early twentieth century had one of the highest GDPs per capita in the world, had become a byword for statist economic mismanagement. Successive governments had lived beyond their means, effectively attempting to purchase public support (Argentina has been viewed as an archetypal case of “populist” economics) while suffocating entrepreneurship.

Since his inauguration on 10 December 2023, Milei can claim some significant wins.

Inflation, long one of Argentina’s nightmares, stood at around 211% (the world’s highest) when he took office; it now sits at around 32%. This is the lowest it has been since 2018. Forecasts for further decreases were cancelled by the predicted impact of the ongoing conflict in the Middle East.

Taking on powerful entrenched interests in the state, Milei’s government has cut more than 50 000 positions in the civil service, many of these having been taken on as part of previous governments’ make-work schemes to solidify political support.

Poverty has fallen too, afflicting around 28% of the population – substantial, although a reversal of the situation in 2024 when over half the country was living in poverty. Much of this has been ascribed to assistance being targeted at people suffering actual deprivation, as opposed to generalised subsidies for the whole population.

Meanwhile, Argentina is looking at a budget surplus for the first time in 14 years.

Perhaps most importantly, Argentina is once again able to make a credible business case. Deregulation across the economy and leveraging Argentina’s advantages – such as its agricultural sector and lithium resources – have given large investors and more modest entrepreneurs alike considerable fresh opportunities. Tax and regulatory relief is specifically targeted at attracting investment.

An element of this is aimed at fostering a change in Argentina’s economic structure, encouraging new energy sources, and positioning the country as a centre of artificial intelligence innovation.

In the coming year, the International Monetary Fund projects a growth rate of around 3.5% (revised down from 4% in light of the Middle East conflict).

Nevertheless, Milei’s government has come under criticism on various grounds: the pain involved in stabilising the economy, the disparate distribution of the benefits of reform across society, and high-profile corruption scandals involving some officials close to Milei. These have led to fluctuations in Milei’s personal popularity and raise questions as to whether reform efforts will be sustained sufficiently to put Argentina onto a high-growth path over the longer term.

A recent commentary from the International Institute for Strategic Studies in London remarked: “Blending heterodox and orthodox approaches to macroeconomic policy, President Javier Milei’s administration has brought the Argentine economy back from the brink of collapse. Yet the situation remains fragile, with much left to be done to achieve durable macroeconomic stability and growth.”