One Year with Javier Milei: Economic and Industrial Policy in Argentina

Before pedaling meme coins and gifting “bureaucracy chainsaws,” Argentinian President and economist Javier Milei positioned himself as a radical solution to Argentina’s economic challenges. A self-described "anarcho-capitalist," Milei campaigned on an aggressive promise to dismantle the country’s bureaucracy, curb hyperinflation, and impose sweeping free-market reforms. His rise from an outsider economist to the presidency in November of 2023 was fueled by public frustration with decades of economic stagnation, chronic fiscal deficits, and soaring inflation.

More than a year into his presidency, Milei’s policies have had time to take effect. His administration has pursued drastic austerity measures, including mass layoffs of public sector workers, deep cuts to government subsidies, and the elimination of Argentina’s fiscal deficit for the first time in over a century.

Recently, various political scandals and stunts have created a noisy political environment, complicating efforts to analyze preliminary data and assess policy effectiveness. Separating economic substance from political spectacle remains a challenge in evaluating his presidency thus far.

Milei’s policies are not just difficult to analyze due to political noise—they are also exceptionally sweeping in scope. Unlike previous administrations that took a piecemeal approach to economic reform, Milei has enacted broad, structural changes at an unprecedented pace. His economic strategy, largely implemented through omnibus decrees and emergency powers, touches nearly every sector, from labour laws and energy subsidies to foreign trade and monetary policy. To fully assess the impact of Milei’s presidency, it is crucial to first break down the core policies he has enacted. These include aggressive spending cuts, mass deregulation, and controversial proposals like dollarization.

At the core of Milei’s agenda is budget consolidation, aimed at eliminating Argentina’s fiscal deficit. True to his libertarian views, Milei sees government intervention as inherently harmful, limiting the state’s role to maintaining public order and enforcing the legal system. His administration has slashed public spending through "La Licuadora" ("the mixer"), a policy of allowing inflation to erode real wages and social benefits rather than directly cutting them—an austerity method with a history in Argentina. Public infrastructure projects have also been almost entirely halted, shifting the financial burden to private investors. The phrase "No hay plata" ("There is no money") has become emblematic of his approach, underscoring the depth of his spending cuts.

Beyond austerity, Milei has sought to make Argentina more attractive to foreign investors through the RIGI program (Régimen de Incentivos para Grandes Inversiones), a key component of his omnibus law. RIGI offers 30-year tax concessions and trade incentives to large-scale investments exceeding $200 million, particularly in sectors such as energy, raw materials, infrastructure, and technology. The initiative aligns with global efforts by Western nations to secure supply chains independent of authoritarian regimes like China and Russia. However, while these reforms aim to position Argentina as a more attractive destination for foreign capital, deep-rooted economic instability and legal uncertainty continue to deter significant investment.

The immediate impact of these sweeping reforms has been mixed. While inflation-adjusted rental prices for new leases have declined, many existing tenants have faced rent hikes up to three times their previous rates when renewing contracts. Additionally, the sharp reduction in subsidies—especially for energy, food, and public transport—has significantly raised living costs, contributing to financial strain across much of the population. As a result, 40% of young Argentinians (ages 25-35) still live with their parents or grandparents, underscoring the difficulties in achieving financial independence amid rising expenses.

Milei’s economic reforms have created a stark divide between those who have benefited and those who have borne the brunt of austerity. Among the winners are foreign investors and large businesses, particularly those positioned to take advantage of deregulation and investment incentives (albeit constrained to certain industries like agriculture, mining and critical minerals, and energy). The government has highlighted early signs of investor confidence, with some sectors, including agriculture and mining, experiencing an uptick in foreign interest. In financial markets, Argentina’s country risk index has fallen to 561 points (the lowest since 2018) in early 2025, reflecting improved investor sentiment. 

However, these benefits have not yet translated into broad economic relief for most Argentinians. Inflation, though slowing from its peak in 2023, remains among the highest in the world, still exceeding 150% annually. Public sector employees, many of whom faced mass layoffs, have been hit hardest, while private sector workers struggle with higher costs of living. A study by Argentina’s National Institute of Statistics and Censuses (INDEC) reported that real wages had dropped by an average of 15% since Milei took office.

Milei’s policies have also put strain on provincial governments, particularly those dependent on federal transfers. Education and healthcare systems, already underfunded before Milei’s presidency, have been forced to implement cost-cutting measures, including teacher salary freezes and hospital budget reductions.

Despite these challenges, Milei’s administration insists that the country is on the right track. The elimination of the fiscal deficit for the first time in over a century is a notable achievement, and inflation, while still extreme, has been slowing month over month. Economic growth is optimistic, with forecasts expecting a stabilization of the economy and 5% growth. The government argues that these short-term contractions are necessary to achieve long-term stability. The real test will be whether the private sector can absorb the displaced public workers and whether foreign investment materializes at the scale needed to drive sustainable growth.

Looking ahead, Milei’s ability to stay focused on economic reform rather than political distractions will be crucial. His reliance on attention-grabbing tactics, from wielding chainsaws at rallies to engaging in public feuds on social media, has fueled criticism that he is more focused on spectacle than governance. While these stunts have solidified his base and kept him in the international spotlight, they risk undermining investor confidence and weakening his ability to pass additional reforms.

Argentina’s economic problems are not on track to be solved within a year, and the success of Milei’s policies will ultimately depend on their long-term implementation. If inflation continues to decline, investment increases, and employment stabilizes, his aggressive approach may prove effective. However, if social unrest escalates and political resistance grows, he may find it increasingly difficult to sustain these measures. The key challenge for Milei will be maintaining economic discipline while building enough political consensus to prevent his reforms from being reversed. If he can resist the temptation to prioritize political theatrics over structural progress, Argentina may be on the path to long-term stability.