Macro gains and a stalled domestic economy
Nearly three years after Javier Milei took office, Argentina presents two contrasting pictures. The national accounts show a fiscal surplus, inflation reduced from a peak close to 300% to 34% and lower borrowing costs, while mining and energy projects plus growing soy and beef exports are easing the chronic dollar shortages that repeatedly triggered crises. A Financial Times analysis titled Milei's economic reforms under pressure describes the effects of the government's austerity, deregulation and opening program.[S1][S2][S4]
The same adjustment has weighed on domestic activity. JPMorgan believes the economy may have entered a technical recession, defined as two consecutive quarters of falling gross domestic product, as restrictive monetary policy and reduced public spending weakened consumption. According to the consultancy Equilibra, cited by the newspaper, real wages remain about 10% below their level at the start of 2023, and official figures record the loss of some 300,000 formal jobs since the current administration began.[S1][S4]
Total investment has fallen 13% since 2023, according to the consultancy Invecq. Last year's interest-rate increases, adopted amid pressure on the peso before the legislative elections, together with continued tight monetary policy, restricted credit and limited expansion. Small shops, industry and other sectors tied to the domestic market feel the squeeze most directly.[S1][S2][S3]
A divided economy and a political challenge
Businesses welcome the loosening of import restrictions, capital controls and regulations that hampered their operations, but they now face weaker demand and stronger competition from imported goods. Martín Rapetti, founder of Equilibra, argued that some sectors are moving differently, describing islands of strong growth while the rest of the economy stagnates or contracts. He explained that jobs lost in shrinking activities are not absorbed by mining and energy.[S1]
The gap between export sectors and the domestic market has become one of the program's central difficulties. The government hopes that a new Milei term would lower country risk and unlock tens of billions of dollars of investment, especially in natural-resource projects. A senior official, cited without being identified because he was not authorized to speak publicly, said society has not yet grasped the scale of the wealth that natural resources could generate.[S1]
Milei has refused to change course. In September he said his administration would not move a single millimeter from its current strategy. His comments on household hardship also drew criticism: he called the widespread complaint that people cannot make it to the end of the month a colossal stupidity and, faced with a record 6 million people with unpaid debts, said nobody had forced those citizens to take out loans.[S1][S3][S4]
The Financial Times piece said corruption allegations involving members of the administration damaged Milei's image as a leader removed from traditional political practices. According to the pollster Atlas Intel, his approval rating fell from 43% in January to 38% in August. Political consultant Sergio Berensztein said Milei can still compete for a second term but warned the electoral outcome remains open, adding that there is a risk the opportunity is wasted through poor political management.[S1][S3]
Opposition, 2027 and the stakes for the model
The Peronist opposition, still fragmented and without a defined candidate for 2027, is seeking to capitalize on the social cost of the adjustment. Buenos Aires province governor Axel Kicillof, one of the figures hoping to lead that space, criticized the economic model over its potential impact on industry, commerce and employment. Several polls cited by the coverage indicate the opposition remains competitive, and analysts in Buenos Aires argue that this emerging political risk is influencing the recent rise in country risk.[S1][S2][S4]
Nicolás Dujovne, economy minister during Mauricio Macri's government, argued that another Milei victory would mark a change of cycle for Argentina. He said it would be the first time this century that a government could show the results of a healthy economy open to the world, breaking the alternation between short expansions and deep crises. The government has launched some measures to encourage recovery, including a scheme to promote mortgage credit.[S1][S3]
