Buenos Aires, Argentina - Javier Milei’s first year as Argentina’s president has drawn significant global attention, with praise pouring in for his bold economic reforms and the country’s unexpected recovery from the brink of collapse. On December 10, Milei marked his first year in office, proclaiming from the Casa Rosada that Argentina could anticipate a “future of prosperity” previously deemed unimaginable. With President-elect Donald Trump set to assume office in the United States, Argentina’s strengthening ties with Washington could offer new opportunities. But can this momentum sustain through 2025?
When Milei took office in late 2023, Argentina faced severe economic challenges: hyperinflation was looming, the central bank’s reserves were in the red, and public spending was spiraling out of control. Yet, despite these obstacles and limited political support in Congress, Milei’s administration has delivered results that few anticipated.
Key reforms included aggressive budget cuts, deregulation, and a tax amnesty program that successfully attracted undeclared banking deposits. Inflation has dropped significantly, consumer confidence has improved, and the economy is officially out of recession. Argentina’s stocks have soared, with market indices delivering the highest returns globally in 2024. The reduction in sovereign risk and increased investment as a percentage of GDP are further indicators of stabilization.
Milei’s reforms reflect his ability to address the country’s structural problems, including inefficient public spending and endemic corruption. His administration’s commitment to fiscal discipline has been especially noteworthy, a sharp contrast to Argentina’s historical tendencies toward unsustainable expenditures.
These efforts have resonated with the public. Recent polls show that Milei enjoys a 50% approval rating—a remarkable feat given his implementation of the largest austerity program in Argentina’s history. His ability to rally public and market support has been crucial in advancing his ambitious economic agenda.
The coming year presents significant hurdles. Argentina must deliver on projected economic growth of 5%, as estimated by the International Monetary Fund (IMF), following consecutive years of contraction. Inflation, while reduced, remains a pressing issue, with estimates ranging from 18% to over 30% in 2025.
October’s midterm elections will be pivotal. Milei’s administration aims to secure a stronger position in Congress to deepen reforms. However, failure to sustain economic recovery or manage inflation could undermine public confidence and investor sentiment.
Despite these risks, Milei’s government has taken steps to mitigate vulnerabilities. Recent foreign policy victories, such as the Mercosur-European Union trade agreement and the initiation of OECD accession talks, signal Argentina’s intention to strengthen its global economic ties.
Milei has fostered a close relationship with President-elect Trump, viewing him as a critical ally in securing favorable terms with the IMF. Argentina owes over $40 billion to the Fund, and Trump’s administration is expected to push for debt restructuring that could offer Milei “breathing room” to enact further reforms.
Meanwhile, Argentina’s relationship with China has seen a cautious thaw. After initial tensions, China renewed its currency swap agreement with Argentina, bolstering foreign reserves. The November meeting between Milei and Chinese President Xi Jinping at the G20 summit underscored a pragmatic approach to maintaining this vital economic partnership.
Domestically, Argentina’s energy sector has become a cornerstone of its recovery. Rising shale oil and gas production has significantly reduced energy imports while boosting exports, contributing to Argentina’s trade balance. Recent investments, including a $2.5 billion project by Rio Tinto for lithium mining and a $3 billion oil pipeline initiative, indicate growing investor confidence.
Argentina has also initiated discussions with Brazil about exporting natural gas, signaling its intent to capitalize on its energy boom. These developments position the country as a potential regional energy leader.
To maintain its trajectory, Milei’s government must address lingering vulnerabilities and advance structural reforms. Key steps could include:
Javier Milei’s first year in office will be remembered as a remarkable turnaround for a country on the brink of economic collapse. His administration has exceeded expectations, implementing bold reforms while earning public and market confidence.
