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Argentina sees economic recovery as opposition to Milei rises

24 Jul 2025 22:16
24 Jul 2025 22:42

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Argentina sees economic recovery as opposition to Milei rises

Reuters

A report from J.P. Morgan highlights a "deep and surprising" recovery in Argentina's economy under President Javier Milei but cautions that the future of his economic plan hinges on the results of the upcoming October legislative elections.

Since taking office in December 2023, Milei has implemented sweeping measures to shrink the state, cut spending and liberalize the economy, News.Az reports citing foreign media.

According to the investment banking and research arm of the U.S. financial giant, Argentina has managed in just a few months to lower inflation, reach fiscal balance and strengthen its foreign reserves -- after years of stagnation, crisis and heavy dependence on public spending.

"The country is undergoing a structural transformation with extraordinary potential, though not without significant risks," economists Diego Pereira and Lucila Barbeito wrote in the report.

Monthly inflation fell to 1.6% in June, down from more than 25% in December. The government has posted a primary surplus equal to 1.1% of GDP so far this year, and the Central Bank's reserves are beginning to recover.

Moody's upgraded Argentina's credit rating for the second time in 2025, and J.P. Morgan projected 2025 GDP growth at 5.5%.

The economic adjustment, however, has come at a significant social cost. The government has laid off public employees, cut subsidies and suspended state infrastructure projects. Despite improvements in macroeconomic indicators, social conditions remain fragile.

A recent poll by Zuban Córdoba found that 52.8% of voters plan to punish the government in October's elections, while 38.3% intend to reward it. The survey also showed that 57.5% of Argentines hold a negative view of Milei.

According to polling firm Analogías, favorable opinions of the government declined by 2 to 3 percentage points in July. Milei's approval rating dropped 4 points to 44%, while his disapproval rose to 50%, creating a net negative gap of 5.5 points, Perfil reported Wednesday.

Respondents were critical of Milei's tone and communication style: 73% said they disagreed with it and 66% described it as "violent."

Analysts and banks agree that without political support in Congress, the government's economic course could weaken.

Economist Milagros Gismondi wrote on X that many companies are beginning to focus on boosting productivity, which she sees as a positive shift.

News.Az