https://www.newsweek.com/argentinas-javier-milei-keeps-proving-his-critics-wrong-2095695
Just months ago, Argentina seemed destined for another economic collapse: soaring poverty, runaway inflation and dire warnings from economists that President Javier Milei's radical austerity measures would choke growth. Instead, the economy is expanding at a pace few thought possible — leaving Milei's legions of critics scrambling for explanations.
In a stunning reversal, Argentina's economy posted a 7.6 percent year-over-year growth rate in the second quarter of 2025 — its strongest in nearly two decades — fueled by deregulation, sharp cuts to public spending and the loosening of currency controls. Retail sales, manufacturing and finance all surged, helping consumer spending jump nearly 3 percent from the previous quarter.
Since assuming office in December 2023, the firebrand libertarian economist has slashed government expenditures and secured a $20 billion deal with the International Monetary Fund (IMF). His administration promised to dismantle decades of state intervention in favor of free markets — policies that many observers warned would deepen recession and spark social unrest.
Part of the turnaround has been Milei's dismantling of el cepo, the restrictive system of exchange controls first imposed in 2011 that prevented companies from moving profits abroad and limited Argentines' access to dollars.
After he lifted the restrictions, the peso was allowed to float within a managed band, narrowing the gap between official and black-market exchange rates. Reserves at the central bank climbed to their highest level in two years, bolstered by IMF funds, a $5 billion swap line with China and fresh loans from multilateral banks.
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Milei also ripped up Argentina's rent-control law in late 2024, removing limits on lease terms and rent increases that had discouraged landlords from renting. Within months, the supply of rental housing in Buenos Aires jumped by 195 percent, according to the city's real estate observatory, and median asking prices fell by about 10 percent as more apartments returned to the market.
Some leftist and socialist organizations, including the Socialist Workers' Party (PTS) and the Workers' Left Front, criticized the move at the time, arguing it favored landlords at the expense of tenants. But the reality has so far borne out the opposite: supply has soared. On Zonaprop, one of Argentina's largest real estate platforms, traditional rental listings surged from about 5,500 before the reform to over 15,300 — a 180 percent increase — with a third of that rise happening in just the first month after deregulation.
"We have the best president in the world," Argentina's economy minister, Luis Caputo, wrote on X as he shared the recent growth figure.
The surge in GDP has defied predictions from financial institutions, including the IMF, that growth would stagnate. On a June 18 panel hosted by the Peterson Institute for International Economics, Harvard economist Carmen Reinhart warned: "What you begin to see is cumulative real appreciation and then the end of the stabilization program with a big depreciation. We've seen this story before in Argentina."
Former IMF official Alejandro Werner acknowledged Milei's fiscal adjustment as "remarkable" but cautioned that its sustainability depends on navigating political risks and avoiding another exchange-rate shock. "The next election might show that he has completed the first phase of consolidating political support for reforms, but the path is risky," Werner said.
The strongest case for optimism has been Milei's success in driving down inflation. In May, consumer prices rose just 1.5 percent — the lowest monthly figure in five years, according to Argentina's national statistics agency. That decline is widely seen as a political and economic turning point.
Still, some economists urge caution. "Argentina's economy is not yet stabilized. The adjustment at the beginning of Milei's term caused a sharp drop in wages, pensions, infrastructure, and provincial budgets," economist Guido Agostinelli told Newsweek. "Inflation has slowed, but it came at the cost of transferring resources from the middle class to the wealthiest and increasing inequality."
Agostinelli pointed out that inflation peaked at 25.5 percent in December and has since slowed month over month, but warned the decline is deceiving. "We're seeing less inflation partly because demand collapsed, not because costs fell," he said to Newsweek. "Since there's no strong demand, prices don't rise as much despite higher input costs."
He also added: "The peso remains artificially strong, supported by IMF lending and more debt. But net reserves are still negative, and the lack of foreign currency may force another currency adjustment after the elections."
Yet, the government's fiscal overhaul and monetary tightening have come at a steep social cost. Poverty, while down from its December peak of 53 percent, still affects 38 percent of Argentina's population. In April, a general strike paralyzed Buenos Aires as unions protested budget cuts and reduced government transfers.
Even Milei's allies acknowledge the precariousness of the moment. José De Gregorio, a former central bank governor in Chile, said at the Peterson Institute panel: "I have to admit they are doing the right things. They have a very good chance to succeed. But we know how hard it is here."
While Milei's sharp fiscal and monetary tightening has won praise for restoring stability, economists warn that his recovery rests on a fragile foundation. "Investment and industrial production remain alarmingly low, and this model doesn't seem sustainable without more external debt," Agostinelli told Newsweek. "Countries that make lasting progress have development planning. In Argentina, Milei is leaving everything to the market, which makes sustainable success almost impossible."
He also noted: "The artificially strong peso benefits a small segment of society that can travel or buy cheap imports, but history shows that these situations usually end in devaluation, job losses and more inequality."
Martín Redrado, former head of Argentina's central bank, cautioned that the country risks taking the wrong lessons from taming its inflation without addressing deeper structural challenges.
"We've settled for defeating inflation, but we shouldn't be complacent," Redrado told Los Andes. He pointed to the lack of a comprehensive tax overhaul and persistent barriers to corporate capital flows as signs the recovery is not yet secure.
External factors also pose serious risks. Global conditions — particularly the policies of Milei's ally, U.S. President Donald Trump — have weakened Argentina's key export markets. Trump's trade war has driven down prices for oil and agricultural commodities, reducing Argentina's export earnings and complicating Milei's effort to build reserves and attract investment.
As The Economist reported, Trump's economic brinkmanship "makes for risk-averse investors," and Argentina, with its reliance on IMF lending and an overvalued peso, remains highly exposed to external shocks.
Yet despite warnings about volatility ahead, Milei appears convinced that the economy is firmly on the path to recovery. On television, he keeps repeating his now-familiar refrain: "Instead of talking about growth at Chinese rates, the world will soon be talking about growth at Argentine rates."
Argentina is a shit hole. It has always been they should hold since it was founded by Wogs. This is why Mexico is a shit hole too since it was founded by Wogs. Spain is the shithole of Europe and is full of part niggers . The berbers came in and raped the white women. OP will never be a white person. Soon the tainted DNA will show itself again and Argentina will become the shit hole of South America again. This Java guy is a chubby midget.
Argentina is a shit hole and has always been. Mexico is a shit hole too because of the Berber in the woodpile DNA. And I didn't even use the 'N' word.
During the Cold War, Soviet communists reportedly referred to American liberals as “useful idiots.” Although the origin of the quote has been challenged (and attributed to both Lenin and Stalin), it captured many of the adherents of communism after World War II. From higher education to Hollywood, dilettantes on the left embraced Marxism with little real understanding of the philosophy or its implications.
We are now seeing the rise of a new generation of armchair revolutionaries who are calling for everything from the overthrow of the U.S. government to the seizure of factories and homes.
Democratic New York mayoral candidate Zohran Mamdani personifies this new movement of young people lacking any memory of the failure of socialist and communist systems in the 20th Century.
Mamdani is perfect for trust-fund baby Trotskyites. The privileged son of a radical Columbia professor and a Hollywood producer, Mamdani went to the elite Bowdoin College, which charges over $70,000 annually in tuition. He is part of the “radical chic” of American higher education, where extreme views are fully mainstream.
Mamdani shows the appeal of mouthing Marxist manifestos as manifest truths. It is Marxism-lite — promises of everything from rent control to making “Halal eight bucks again.”
In one speech before the Young Democratic Socialists of America conference, Mamdani even stated matter-of-factly how one of the goals is to “seize the means of production” in America.
“Right now, if we’re talking about the cancellation of student debt, if we’re talking about Medicare for all, you know, these are issues which have the groundswell of popular support across this country,” he said. “But then there are also other issues that we firmly believe in, whether it’s [boycott-divestment-sanctions against Israel] or whether it is the end goal of seizing the means of production, where we do not have the same level of support at this very moment.”
>>1420000Like Mamdani, these young voters have no inkling of what life was like under socialist and communist governments. They were not alive when radical shifts to socialism in Great Britain and France destroyed their economies and had to be reversed. They did not see the collapse of the Soviet Union or the move toward capitalism by China to avoid economic meltdowns.
Yet, as Mamdani stated, the radical left has to wait to seize such powers until it has “the same level of support at this very moment.” Unfortunately, socialist programs can produce the very dire conditions that lead to even greater consolidation of state controls and power.
Notably, most of Mamdani’s proposals would violate the Constitution or bankrupt the city. For example, efforts to seize multimillion-dollar luxury condos would constitute unconstitutional takings unless he was prepared to buy the units at their market value — a virtually impossible proposition.
Such considerations are rarely raised, let alone resolved, in radical conferences. Earlier this month, University of Minnesota liberal arts professor Melanie Yazzie joined others for a “teach-in” in which she delighted the audience with calls for the overthrow of the country by “people who come from nations who are under occupation by the United States government.