ARGENTINA AFTER THE CHAINSAW: MILEI WON THE FIRST BATTLE. THE SECOND WILL BE HARDER.
Inflation has collapsed, fiscal discipline has returned and markets have rediscovered Argentina. But stabilization is not prosperity. Milei now has to prove that liberalisation can produce investment, productivity, jobs and sustainable real wages.
Argentina is once again becoming one of the world’s most fascinating economic experiments.
Not because Javier Milei has proved libertarian economics right.
And not because his critics have proved it wrong.
Something considerably more interesting is happening.
Argentina has moved from one economic problem to another.
The first was stabilization.
The second is development.
And history suggests that the second will be much harder.
The Economist recently described Javier Milei’s liberal experiment as “struggling”. The description captures an important change in Argentina’s economic cycle, but it risks obscuring what has actually happened.
The stabilization programme has produced results that would have appeared extraordinarily difficult only a few years ago.
But the very success of stabilization has changed the benchmark against which Milei will now be judged.
Argentines no longer ask only:
Will inflation explode again?
Increasingly, they ask:
Where are the jobs?
What happened to my purchasing power?
When will companies start investing?
When will credit become normal?
And ultimately:
When will macroeconomic stabilization become prosperity?
That is the real Argentine question of 2026.
THE FIRST MILEI EXPERIMENT
Milei inherited an economy distorted by years of fiscal deficits, monetary financing, exchange controls, subsidies, multiple exchange rates and chronic inflation.
Whatever one thinks about his politics, the magnitude of that inheritance matters.
The policy response was deliberately radical.
Government expenditure was cut. Fiscal discipline became the centre of economic policy. Regulations were eliminated. Parts of the economy were opened to greater competition. The monetary and foreign-exchange framework was progressively modified.
The results on inflation have been substantial.