Milei’s magic fades on Argentina’s slowing economic recovery

President Javier Milei's ambitious plans to revive Argentina's economy are faltering, causing political difficulties as he heads into next year's election. Economists have revised their growth predictions for this year down to 2.7 percent from 3.5 percent last December, far below the five percent growth Milei had envisioned in his annual budget.

While this is an improvement over the recession he inherited, many analysts now predict the expansion will slow, a scenario that would have seemed unlikely after his victory in midterm congressional elections last October. Milei's decision not to return to international markets may be contributing to the slowdown. The Central Bank's head, Santiago Bausili, acknowledged that the economy has been growing at around two percent a year since 2024, much more slowly than desired.

With economic activity expanding only 1.9 percent through June, compared to a 6.1 percent pace a year prior, economists are concerned about the uneven recovery. While mining, energy, and agriculture are driving growth, manufacturing, construction, and commerce are weakening. Small and medium-sized businesses, which employ many Argentines, may also be affected if the government doesn't address their challenges.

Public opinion surveys indicate that Milei's approval rating has dropped to 37.1 percent, one of the lowest in his presidency. Analysts warn that a weak labor market and sluggish economic activity could create nervousness in financial markets as the election approaches.