On paper, Argentina's economy has turned a corner. Inflation, the country's chronic ailment, has fallen to 31% — the lowest since 2018. The budget is in surplus for the first time in 14 years, and the IMF projects 3.5% growth in 2026. For a country long seen as South America's perennial crisis case, Milei's two years look dramatic. But how those results were achieved leaves room for caution.
The numbers really did improve
President Milei took office in late 2023 vowing a "chainsaw" of austerity: subsidy cuts, deep reductions in public spending, tighter monetary policy. The shock therapy cooled monthly price rises, and annual inflation fell to 31%. The budget was balanced by cutting spending. That is real, and it counts as an achievement.
Poverty, too, fell after spiking. It rose to 53% in the first half of 2024, then dropped to 28.2% by the second half of 2025 — again the lowest since 2018. In a country where inflation hammers households, simply taming prices is itself the biggest anti-poverty measure.
Reading the fine print of "it fell"
The catch is how poverty fell. The Catholic University of Argentina (UCA) has flagged that the government's methodology (INDEC) may overstate the improvement: roughly three-quarters of it could be a statistical effect of slower monthly inflation rather than genuine income gains. Whether everyday life actually got better is a separate question.
And the surplus came from cutting spending — including pensions, social protection and health subsidies. As covered in the piece on disability pensions, Argentina has sent Congress a bill to tighten non-contributory disability pensions, and the PAMI health plan for retirees has reportedly trimmed drug subsidies. When the macro numbers fall into place, it is worth asking where the adjustment landed.
"Miracle" or "warning"?
Some call Milei's approach an "inflation miracle." Others argue it is a warning, not a blueprint. Is the price of stopping inflation fast falling disproportionately on the weakest? Is the recovery concentrated in a few indicators? How long can exchange-rate stability hold? The expansion of energy exports (the Vaca Muerta field and pipeline) is a tailwind, but whether it lifts the whole economy remains to be seen.
So Argentina's 2026 is a live experiment in the question "does austerity work?" The numbers improved — that's true. But who is enduring how much beneath those numbers is what tells you whether it is success or failure.
Not a faraway story
Fiscal sustainability and the lives of the most vulnerable: reconciling the two is a question every social-security system runs into. Argentina is doing it at extreme speed, so the results show up clearly. Austerity calmed prices — and at the same time, whose share did it cut? The answer is still a little way off.
When the macro numbers fall into place, the adjustment tends to land on those who lean on the system the most.
References
- Americas Quarterly, "Argentina: A 2026 Snapshot" — americasquarterly.org
- Focus Economics, "Argentina's Economy Under Milei" — focus-economics.com
- The Conversation, "Milei's inflation ‘miracle’ is a warning, not a blueprint" — theconversation.com
- Atlantic Council, "A milestone on Argentina's long road to recovery" — atlanticcouncil.org
- IMF, "Argentina and the IMF" — imf.org
※ This article is the author’s commentary based on public information. Please confirm the latest figures, dates and procedures with governments and primary sources. Quotations are kept minimal and sources are cited.