Argentina is going through a series of structural challenges in the economic and financial plane, with some green and other red lights, since the beginning of the mandate of Javier Milei.
Argentina is going through a series of structural challenges in the economic and financial planewith some green and other red lights, since the beginning of the mandate of Javier Milei. Some analysts and experts predicted the imminent crisis of the model for several months. But this never happened. Nor is a fever in the creation of employment and productivity, or euphoria of the international market in Argentine bonds visible; or a shock of direct foreign investments.
In order to be consistent and fair in the respective analysis we have to do a radiography under the conditions assumed by the libertarian leader by the National Executive Power. Alberto Fernández makes the power transfer with some positive numbers in employment and productivity: unemployment fell from 14% to 6% from 2019 to the end of 2023; and the installed capacity of the industry touched 70%arriving in some sectors such as 84 % oil refining and 79% basic metals. However, the situation was critical in inflationary, purchasing power and reserves: inflation exceeded 200% ; The prices in the domestic market of some goods came the Triple of its value in the United States and Europe– Among them the ones from the textile industry- representing up to 20 % of the average salary of a registered worker. Sergio Massa leaves the Ministry of Economy with salaries similar to those of December 2019; and with the gap of more than 100% in dollars, where it was a Odyssey for citizens save in dollars. Which was a check to the purchasing power for most Argentines. And in terms of reserves, the situation of the last year was very critical; Not only for drought, but also by the Lack of trust of the local and international debt market in governmentwhere the country risk could never pierce the 1,000 basic points; And the risk of sovereign bonds was very high, reaching a Tir of more than 40%positioning itself as one of the greatest profitability in the region, but at the same time one of greater risk.
In that context assume Javier Mileiadded to a very high fiscal deficit. That is why since the first days of his mandate, the president’s objectives are to work systematically in eradicating two central problems of the economy: inflation and fiscal deficit. The first, with significant and positive results, moving from an abysmal number of 200%, to an interannual of 39%, in just a year and a half of mandate. Achieving it with a price release cocktail, gradual opening of imports, Promotion of competitiveness in all sectors of production and the closure of the final tap of the monetary emission. The fiscal surplus is another fundamental anchor for the future of the success of the economic program: much of the Investor Trust And the market focuses on this fundamental point, which orders the entire macroeconomic management scheme. Another fundamental point to rescue is the confidence of the main global investment funds in Javier Milei, where Moody´s improved the credit rating of “Caa3” to “Caa1” the sovereign bonds of national debt with stable perspective (previously positive). Where it projects an economic growth of 4% for this year.
The partial output of the stocks, the support of the United States and the International Monetary Fundthe confidence of the local and international market, should be accompanied and reflected in the increase in the stock of direct foreign investments in the medium term, since together with exports, it is one of the central roads to generate genuine dollars. The IED It contracted last yearand also the first quarter of 2025, with strong falls in manufacturing sectors, but increase in investment of Natural resources such as hydrocarbons, Mining and energy. Which reflects the potential that There is and the importance of these last sectors of the economy for the governmentsince they will motorize and will be central to economic growth and the generation of currencies in the next decade. According to the Ministry of Energy of the Nation by 2033, hydrocarbon and energy exports will reach the U $ 33,000 million. When they currently do not exceed the U$ 15,000 million annually. If this objective was fulfilled, the export record would be exceeded year after year, reaching the record figure of US $120,000 million between goods and services. Therefore, tools such as Rigi, They were well seen by the signatures of sectors where investment amounts exceed U $ 200 millionas the sectors mentioned above.
However, one of the biggest challenges facing the economic model is in terms of employment generation and the evolution of the manufacturing industry. The large urban centers such as the AMBA, city of Córdoba, Rosario, CABA and La Plata will cross several complex months in labor matters, since with the change of productive matrix, and the reduction of import tariffs, several industries such as textile, plastics, metallurgical and automotive Reduce personnel templatesnot only for lack of competitiveness- with the current price of the dollar- but also against the Southeast Asia products at cheaper prices than nationals. But the Government’s commitment is that these jobs are reconve most competitive industriesas already indicated and the services. With economic deregulation, inflation is feasible for the next two years to drill 20% per year, if there is no abrupt jump of the exchange rate, which Press monthly the retail or wholesale index. Which the government would be awarded a victory and fulfill one of its central campaign promises.
In short, the Economic direction of Argentina continues to travel a deep transition stagewhere they live Macroeconomic stabilization signals with Structural challenges that still does not find a clear resolution. The fiscal order and inflationary deceleration process are elements that generate positive expectations in certain sectors of the market and the investment community. However, they persist questions around the social impact of reformsthe recovery of internal consumption and the role of manufacturing industry in the new productive scheme.
The sustainability of the model will ultimately depend on its Ability to combine stability with growthinvestment with employment, and external competitiveness with territorial development. In this sense, the coming months will be key to Evaluate whether the propelled transformations manage to consolidate an inclusive development pathor if, on the contrary, They deepen the gaps structural that historically have conditioned the economic progress of the country.
Source: Ambito
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