Why Argentina's Economy is Stalling

Milei's Initial Reforms and Early Successes

• 💡 President Milei's early austere reforms initially triggered a recession but led to an early 2025 rebound in Argentina's economy.
• 🎯 His plan to combat chronic inflation involved tightening fiscal and monetary policy and a 50% peso devaluation.
• ✅ This strategy initially appeared successful, with month-on-month inflation falling from 25% in December 2023 to a post-pandemic low of 1.5% in May 2025.

Recent Economic Reversal

• 📈 Despite earlier gains, month-on-month inflation has since ticked up to 2.9% in January, which would annualize to over 40%.
• ⚠️ The head of Argentina's statistical authority resigned in protest after the government prevented an update to the inflation calculation methodology, which would have shown a higher, more accurate reading.
• 📉 The anticipated "V-shaped recovery" has stalled, with the economy barely growing since May 2025 and shrinking in October and November, resulting in a 0.3% year-on-year GDP decrease in November.

Underlying Economic Factors

• ⛏️ Strong growth in Argentina's mining industry (30% year-on-year export growth in 2025) and an oil and gas boom (Vaca Muerta field) have provided some support to GDP figures.
• 🌍 This commodity-driven growth is largely attributed to rising global demand for precious metals and energy, rather than being a direct result of President Milei's policies.
• 💸 Net foreign investment turned negative for the first time since 2003, as some international companies sold assets, reflecting broader anxieties about Argentina's political stability rather than solely Milei's actions.