Buenos Aires, Argentina – President Javier Milei's radical economic policies in Argentina are drawing international attention for their rapid fiscal adjustments and efforts to curb hyperinflation, with economist Niall Ferguson hailing them as a "man-made miracle." Ferguson stated in a tweet, "> While the world fixates on Donald Trump’s populist cocktail of reciprocal tariffs and big, beautiful deficits, @JMilei is delivering a man-made miracle that should gladden the heart of every classical economist and quicken the pulse of all political libertarians." This assessment underscores the stark contrast between Milei's austerity-driven approach and more interventionist economic models.
Upon taking office in December 2023, President Milei inherited a challenging economic landscape, marked by a 2023 hyperinflation rate of 211%, a 1.6% recession, and a poverty rate affecting 45% of the population. His administration swiftly implemented a series of "shock therapy" measures, including deep cuts to government spending, elimination of energy and transportation subsidies, and freezes on public infrastructure projects. These measures aimed to stabilize the economy and achieve fiscal balance.
The initial impact of these reforms was a severe recession and a surge in poverty, which peaked at 53%. However, recent data indicates a significant turnaround. Argentina has officially emerged from recession, and the poverty rate sharply declined in the second half of 2024. Inflation, which reached nearly 300% annually in April, has seen a substantial reduction, dropping to approximately 2.5% monthly by early 2025.
The International Monetary Fund (IMF) has expressed strong support for Milei's program, approving a $20 billion rescue package and noting the country's economic performance as "better than expected." The government has successfully posted budget surpluses, a key objective of its fiscal consolidation efforts. While public sector salaries have seen a decline, the administration argues that these adjustments were essential for long-term economic health.
Despite the initial pain and ongoing challenges, including a still-struggling job market, the economy has shown signs of recovery, with some reports indicating the fastest growth in nearly two decades. The World Bank projects a 5.5% economic expansion for Argentina in 2025. Milei's reforms represent a profound shift towards free-market principles, with international observers closely monitoring Argentina's trajectory as a test case for radical libertarian economic policies.