Argentina's Free Market Experiment

[uncle bernard]

Not going well.

 

Here's the article. Some key quotes:

"Milei had predicted a V-like recovery with the creation of new jobs in a more prosperous and stable economy. 

Instead, the economy stalled out, declining in the second quarter compared with the previous three months. Unemployment is at 7.6%, up from 5.7% when Milei took office. And Argentina has about 200,000 fewer jobs since he took office, government data shows."

 

"At a nearby bakery in La Matanza, about 300 people line up every day for bread. Celia Cisneros, the baker, said many families don’t have the 75 cents for a bag of bread that is already subsidized by a local nonprofit. Others tell her the bread is likely the only thing they will eat that day." 

 

"Milei’s removal of trade barriers along with a stronger peso fueled a boom in imports, from tires and new cars to shoes and T-shirts. Many Argentines purchase cheaper imported goods on Temu and Shein, the popular online Chinese marketplace apps.

But the labor-intensive industries that politicians covet here, such as construction and manufacturing, haven’t recovered. Gustavo Murgia hasn’t found work since his factory layoff last year.

“I should be working, but what can I do?” he said. “The country is going backward.”"

 

The Trump administration is now trying to step in to save them.

"A possible lifeline emerged Monday, when U.S. Treasury Secretary Scott Bessent said the Trump administration is looking at options to provide Argentina with a financial backstop as Milei struggles to complete his economic overhaul.

Investors cheered the news, boosting the country’s stocks and sending its currency, the peso, 2% higher. On Tuesday, at the United Nations General Assembly, Milei met with President Trump, who has praised the Argentine leader."

[jross]

On the bright side, inflation and poverty is down.  

https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=410888

Quote

 

...If successful, he will reverse 150 years of macro financial disappointment to creditors and Argentine citizens alike.

Since December 2023, Mr. Milei has ushered in an era of economic growth in Argentina, fueled by deregulation, an embrace of free markets and trade liberalization. So far, the numbers speak for themselves. Annual inflation in Argentina plummeted from nearly 300% in April 2024 to a five-year low of 36.6% this July, impressive for a nation with chronic hyperinflation as high as 3,079% in 1990. This dramatic turnaround underscores Argentina’s fight to return to economic stability.

By the end of 2024, Mr. Milei had scored the nation’s first budget surplus in 14 years. Argentina’s poverty rate fell from 53% to 38%. The childhood poverty rate dropped by 14 percentage points, giving 1.7 million children a chance at a better future. A few months later, the Argentine economy grew by 5.8%, the fastest rate since 2022.