From Wealth to Crisis: Can Javier Milei Reverse Argentina’s Economic Decline?

With vast territory, a favorable climate, and fertile land ideal for agriculture and livestock, Argentina’s economy was built on these strengths even before independence. The country attracted significant foreign investment, primarily from Britain, Germany, France, and Belgium, which funded railways, infrastructure, and industry. This influx of capital fueled rapid economic expansion, making Argentina one of the world’s wealthiest nations. By the early 1900s, its GDP per capita had surpassed France’s and Germany’s. With abundant land in the south, Argentina, alongside the United States, became a prime destination for European immigrants seeking a better life.

Argentina’s economic stability began to shift with the Great Depression, which severely impacted its exports. Political instability followed, leading to a military coup. Between 1930 and 1983, the country experienced six coups, five of which resulted in dictatorships.

In 1946, Juan Domingo Perón was democratically elected, introducing a nationalist and populist agenda that reshaped Argentine politics. His administration expanded labor rights, strengthened unions, and dramatically increased public spending to address social issues. Argentina’s economy grew at an average of 8.8% annually in the late 1940s, with wages rising by 46%.

However, Perón’s policies unleashed rampant inflation, and by the time he left office, pensions alone accounted for 29% of the country’s total wealth, straining the economy significantly.

The economic crisis of the 2000s continued to define Argentina. In 2001, the country experienced a political collapse, changing presidents five times in just 12 days. Over the past two decades, Argentina has had ten presidents, only two of whom were not Peronists, including Javier Milei. The country’s economy was marred by persistent inflation, rising poverty, high unemployment, and repeated defaults on IMF debt. These problems eroded trust in the national currency, pushing many Argentines to rely on the dollar. Argentina, once a leading global economy, was now a shadow of its former self.

In December 2023, self-declared libertarian and anarcho-capitalist Javier Milei was elected with a clear majority of 56%, promising to reduce government expenses, lower taxes, and dollarize the economy. His administration’s actions to stabilize Argentina’s economy have included cutting subsidies, freezing public wages, and reducing government spending. However, these policies have triggered economic contraction, rising unemployment, and social unrest, leaving Argentina at a crossroads.

Milei inherited an economy plagued by hyperinflation, which reached 211% annually in 2023. His response was an aggressive austerity program, slashing government spending, freezing public sector wages, and cutting subsidies for essential services. His administration’s motto, “No hay plata” (“There is no money”), encapsulated the urgency of his measures. These efforts bore early results: By October 2024, monthly inflation had dropped to 2.7%, although annual inflation remained close to 200%. By February 2025, inflation continued to decrease, reaching 2.4% for the month, though the annual rate was still high at 66.9%. Projections suggest inflation could fall to 18.3% by the end of 2025. The black market exchange rate gap has narrowed, signaling increased confidence in the peso, partly due to a tax amnesty that brought $19 billion into the banking system.

To attract foreign investment, Milei introduced the Régimen de Incentivos para Grandes Inversiones (RIGI), offering long-term tax breaks and financial flexibility for large-scale projects. This has sparked interest from international investors, particularly in Argentina’s rich natural resources sectors, such as lithium, natural gas, and agriculture. Additionally, the government approved a $3 billion project to expand oil export infrastructure from the Vaca Muerta shale formation, potentially generating over $15 billion in annual revenue and strengthening Argentina’s position in global energy markets.

In February 2025, controversy erupted over the launch of $Libra, a government-backed cryptocurrency designed to stabilize the economy and attract investment. Allegations surfaced that high-ranking officials had acquired significant amounts of $Libra before its public release, leading to accusations of corruption and insider trading. Milei denied the claims, calling them baseless and politically motivated, but promised an independent investigation. Despite the scandal, $Libra continues to circulate, though public skepticism has grown.

Javier Milei’s economic policies represent a bold break from Argentina’s past, aiming to dismantle decades of mismanagement and set the country on a path toward lasting prosperity. While his aggressive fiscal reforms have caused short-term hardship, the rapid decline in inflation, restored fiscal balance, and renewed investor confidence suggest that Argentina may finally be turning a corner.

If Milei’s government successfully transitions from stabilization to growth, leveraging investment in key sectors like energy, agriculture, and technology, Argentina could regain its place as a thriving economy. The coming years will be crucial, but if his reforms hold, Milei may be remembered as the leader who finally steered Argentina toward economic strength and stability.