Argentina Economy Update: All Is Proceeding As I Have Foreseen

Javier Milei (pictured above) was elected President of Argentina in October 2023, and took office in December of that year. He promised large cuts to government spending, bureaucracy, and regulation as the means to revive a long moribund Argentine economy crippled by government over-spending, over-regulation, excess unionism, and corporate cronyism. But would Milei’s program work?

I last wrote about Milei’s implementation of his program in this post in November 2024. That post reported that Milei had succeeded in putting through substantial cuts in government spending and bureaucracy, but that the economy had experienced a recession during his first year in office in 2024. Likely much of that reported recession was not real, reflecting instead the removal from the GDP accounts of wasteful government spending that perversely had been counted as an addition to the economy. But would the economy then revive in 2025 as a result of the new program?

Since that post, I have held off writing further about Argentina, while waiting for sufficient data to make a call as to the success or failure of the Milei program. In recent days data have emerged as to Argentina’s economic performance through the first half of 2025. Here are reports from the OECD on July 7, the Rio Times on July 7, and Argentina Reports on July 10.

The bottom line is that the Argentine economy is now booming. From the Rio Times:

Argentina’s economy grew 7.6% in the second quarter of 2025, official data shows. This is the country’s best performance in years, coming after a long crisis marked by high inflation and shrinking incomes. The main drivers of this growth are a strong rebound in commerce and construction, both of which have responded quickly to new government policies. President Javier Milei’s government took office in late 2023 and made big changes.

To what is the sudden economic success attributable?

The administration cut government spending, ended the central bank’s money printing, and removed many rules that made business difficult. These steps helped restore confidence among investors and business owners. Official figures show private investment jumped 22.7% this year, and construction activity is up sharply. Inflation, which was over 200% in 2023, has dropped fast. By May 2025, monthly inflation fell to 1.5%.

The OECD report mainly focuses on the remainder of 2025 and 2026, predicting strong economic growth if the program of spending cuts (they call it “fiscal consolidation”) and deregulation is continued:

The latest OECD Economic Survey of Argentina projects GDP to grow by 5.2% in 2025 and 4.3% in 2026, following contractions in both 2023 and 2024. . . . “Argentina has achieved an unprecedented fiscal consolidation, but fiscal policy will require further fine-tuning to maintain fiscal prudence in the medium to long term while boosting potential growth,” OECD Director of Country Studies Luiz de Mello said. . . .

Over at Argentina Reports, they admit to skepticism about Milei’s program, but are forced to admit that it seems to be working:

Argentina’s economy recorded a surge of 7.7% in April 2025 compared to the same month last year, outperforming projected growth rates for the Latin American nation. . . . Though many continue to observe (them) with a skeptical eye, Milei may hope to regain the confidence of the Argentinian people with his austerity measures which seem to have fostered his promised economic turnaround.

Really, there’s nothing very complicated about this. Less government spending and less oppressive regulation freed entrepreneurs to go out and create businesses and wealth.

In other economic news from Argentina, during 2024 Milei ended controls on apartment rents. The result: apartment availabilities soared, and asking rents (inflation adjusted) actually went down. From the Cato Institute, February 19, 2025:

With the 2020 rent control law now scrapped, apartments have poured back into Buenos Aires’ rental market, offering a plethora of new options. On Zonaprop, one of Argentina’s largest real estate platforms, traditional rental listings have skyrocketed—from 5,500 before the reform to 15,300 today, a staggering 180 percent rise. A third of that increase occurred within just one month of Milei’s deregulation. Real (i.e. inflation-adjusted) rents have fallen, short-term workarounds are declining, and tenants are finding properties suited to their needs.

Meanwhile, we have a leading candidate for Mayor of New York who proposing the exact opposite of the Milei program: higher taxes, more regulation, stricter rent controls, and increases in government-owned businesses. It seems that neither he nor his supporters can be bothered to look out there in the world to see which government policies work and which ones don’t.