Original article by Pablo Meriguet republished from peoples dispatch under a Creative Commons Attribution-ShareAlike 4.0 (CC BY-SA) license.

Javier Milei’s right-wing government promised to stop inflation in Argentina, and has thus far failed

The neoliberal economic measures of Javier Milei’s government are not improving the economic situation they promised to eradicate. During the election campaign, Milei made several promises that thus far he has been unable to keep. For example, he stated that the price of gas would not increase under his government, but from April to May rates rose by 450%. He also promised that public transportation fares would not increase, but the price of the subway went from 125 to 757 pesos.

The government has not been able to stimulate the growth of the Argentine economy either. According to the IMF itself, which bases a good part of its analysis and recommendations on neoliberal economic theory, the GDP of the Argentine economy will fall by 3.5% in 2024. In this sense, the recession the country is enduring does not seem to have a clear way out. Initially, the IMF thought that the economic contraction would be 2.8% of the GDP, but given the incontestable evidence, it had to adjust its forecast.

However, the IMF maintains that there will be a rebound effect, and that, therefore, in 2025 Argentina will grow by 5%. In addition, the agency praised the economic measures of the Milei government to curb the inflationary process, fiscal adjustment, and liberalization of the economy. Petya Koeva Brooks, deputy director of the Research Department, said that “looking ahead, even in the coming quarters, we expect growth to rebound because we see the effects of fiscal adjustment, the return of confidence and rising wages.”

However, several Argentine economists have stated that such expectations are not based on the reality of the national economy, as the problems caused by high inflation have worsened, as well as the evident decrease in employment in the country. According to data for the first half of 2024, Argentina has the highest cumulative inflation worldwide, 79.8%, and a peak year-on-year inflation of 271.5%.

Another unfulfilled promise of Milei was the increase of employment in the country thanks, according to the libertarian government, to the radical liberalization of the economy. However, despite the set of neoliberal economic measures, there has been a 7.7% increase in unemployment during the first quarter of 2024.

Milei’s administration celebrates the fact that the inflationary process decreased a little compared to previous years, claiming that this is thanks to certain public policies of his administration. This is even though Milei’s brutal fiscal adjustment, the contraction of the State, and the loss of thousands of jobs, which Milei stated would have a very positive impact on inflation, have not had the expected results. For example, food prices in Argentina have risen 260% (40 times more than Mexico), one of many figures which confirms that the neoliberal “shock” measures of Milei are not likely to benefit workers in the long run.

Original article by Pablo Meriguet republished from peoples dispatch under a Creative Commons Attribution-ShareAlike 4.0 (CC BY-SA) license.