Since Javier Milei won the second electoral round with the votes borrowed from the PRO, which allowed him to reach 56%, he has not ceased to warn, through his media representatives, that very hard times and great pain were coming for the “good Argentines” . However, they assured that they would not be the ones who would pay the adjustment, but the “caste.”
On December 12, 2023, the Minister of Economy, Luis Caputoannounced a 118% depreciation of the national currency, taking the exchange rate from $360 to $800, and the liberation of prices through DNU 70/2023. These measures caused a general increase in the relative prices of the economy, triggering inflation to 25.5% in December, when in November it had been 12.8%. Simultaneously, the stoppage of public works throughout the country was announced, which generated a wave of suspensions, layoffs and cuts. This initially affected around 120,000 construction workers, while adjustments also began to be implemented in the national public administration. An emblematic case was the partial dismantling of Trenes Argentinos SA, where nepotism was reported when family members and close friends of the president’s entourage were appointed to several key positions.
The combination of these measures began an economic debacle that was reflected in a year-on-year drop in the main indicators of economic activitysuch as industry and construction. During 2024, these activities accumulated declines of -12% and -16%, respectively, and a drop in GDP for the entire year is projected to be close to -4%/-5% in real terms. This scenario has led to a severe recession, which by the end of the year turned into an economic depression with no signs of improvement. The 2025 Budget outline does not include clear incentives for production or consumption, which deepens the crisis.
Poverty also registered a worrying growth, reaching 49.9% according to data from the UCA Social Debt Observatory. This increase is comparable to that accumulated in the four years of Alberto Fernández’s administration and half of the increase in poverty during Mauricio Macri’s period (2016-2019). Furthermore, since the presidential campaign and until now, the government has never prioritized terms like “production”, “factories” or “industry”. This confirms, as the UIA points out, that there is no real interest in strengthening industrial production.
The economic data show a fall in consumption, an increase in idle capacity and declines of up to -15% in key sectorsreturning to the levels at the end of Mauricio Macri’s mandate. Targeted workers continue to be poor, as happened between 2016 and 2019, and the situation is getting even worse. Meanwhile, sectors of the middle class have descended into poverty or the lower class, and many have exhausted their savings, leaving themselves vulnerable to emergencies.
In terms of inflation, the accumulated annual figure as of October 2024 reached 107%, and November and December are expected to exceed these values, driven by the increase in basic products such as meat, which rose 12% in November and is estimated to will increase 20% in December. Paradoxically, in an economy in depression, monthly deflation (negative inflation) would be expected, as occurred between 1998 and 2001. However, in this context, 3% monthly is practically equivalent to hyperinflation. Added to this is the urgency of the government to obtain a new loan from the IMF, which has already anticipated that it will not approve it before March 2025 and that, in addition, the amount requested will not cover the BCRA reserve deficitestimated at -10 billion dollars by the end of the year.
In short, if the same solutions are applied to the same problems with the same actors, the results will not change. The sacrifice to which the people have been subjected seems useless and without prospects of success. Finally, The legitimacy of certain measures is being questioned by cases of corruptionlike that of Senator Kueider, accused of trying to enter Paraguay with more than 200 thousand dollars of suspicious origin, which puts in check the approval of key initiatives such as the Fiscal Package.
