In a country accustomed to surviving more than planning, the government of Javier Milei Celebrate an adjustment with heroic trim, makeup figures and promises that float in an Excel. Among libertarian speeches and high statements, the real economy resists with a tight jaw and empty pockets. But while the president exports monetarist epic to the world, the world – partially – withdraws credit to his strategic ally: USA. Can a peripheral economy like Argentina hold on to a ship that is no longer a lighthouse? This article is immersed in the data that the official enthusiasm chooses to ignore, and exposes with rigor (and some irony) the fissures of short -term optimism. Because in Argentina of adjustment, everything goes down … except for doubt.
In times when the global economy faces unprecedented structural and geopolitical challenges, the Argentine government has chosen to fervor a unilateral alignment strategy with the United States. This election, not less in terms of international policy, occurs at a time when American Hegemon himself exhibits worrying symptoms of fiscal fragility, excessive indebtedness, institutional deterioration and loss of global leadership capacity. The question that arises, then, is whether it is reasonable to deposit the Argentine economic and financial destiny in a strategic commitment that seems to ignore the growing multipolarity and the rearrangements of global power.
When analyzing recent inflation data, the government has sought to install a successful narrative. The General CPI in April recorded an increase of intermensual 2.78%, consisting of consensus projections, and marking an improvement compared to 3.7% in March. The year -on -year rate was reduced to 47.3%, from the previous 56%, allowing the ruling party to show an alleged disinflationary trend. However, a deeper analysis relativizes this relief.
The monthly underlying inflation reached 3.2% -on top of general inflation -revealing persistent pressures that the government minimizes. If food prices are excluded (a technically more precise metric in the international comparison), the underlying inflation without food remained in 3% monthly, higher than the average of 2.6% observed in the previous quarter. This data shows the stiffness of prices in sectors sensitive to internal dynamics, such as services, where inflationary inertia responds more to structural factors than to the exchange rate.
In this context, the adjusted seasonal data of the last quarter shows a sequential inflation rhythm of 32% annualized. Although less than 35% of December 2024, the decrease is marginal and, in addition, conditioned by a contractive fiscal path and a controlled exchange rate.
As for regulated prices, the intermensual variation was only 1.8%, product of rates still contained in public services. The strategy of “stepping” increasesalthough it reduces inflation in the short term, postpone tariff tensions that, when released, they could rekindle inflationary pressure.
Wholesale inflation also throws warning signs; The IPIM rose 2.8% in April, almost doubleing 1.5% in March. The impact of the official exchange rate, which rose about 9% in the month, was reflected in the prices of imported goods and vehicles, anticipating future transfers at retail prices.
In parallel, the Government celebrates tax surpluses; The April primary was $ 846,000 million, and the financial one of $ 572,000 million, accumulating 0.6% and 0.2% of GDP respectively. However, this achievement is due to a drastic liquefaction of public spending and not to a productive reactivation. Indeed, economic activity shows contractive signs: the March data anticipates a monthly drop close to (-1%). While the government is confident that the combination of disinflation, opening and private credit will revert the recession, this expectation lacks empirical support for now.
In international terms, the situation is even more disturbing. The reduction of the United States credit qualification by Moody’s -from AAA to AA1 -following Fitch (2023) and S&P (2011), reflects a persistent fiscal deterioration. The growing American public debt, the lack of fiscal consensus between Democrats and Republicans, and institutional erosion are symptoms of a power that no longer represents the standard of global solvency.
Market responses have been consistent. In 2011, after the S&P discourage, the S&P 500 index fell 10.4% in just 41 days. In 2023, after the reduction of Fitch, the loss was 10.3% in 58 days. These reactions indicate that the market perceives credit degradation as a sign of structural vulnerability, not as a political anecdote. In this context, the Argentine commitment to a strategic alignment with the USA. It looks, at least, risky.
The official narrative, plagued by euphoria for the fiscal adjustment, the fall in inflation and exchange stability, omits the social consequences, the productive deterioration and the structural fragility of the new local economic order. The Government presents as “virtuous” a contraction that, strictly speaking, reminds more of the dismantling of productive capacities than a sustainable growth path.
In addition, commercial liberalization – which includes tariff reductions to technological goods – has begun to cause dismissals in manufacturing sectors. The contraction of domestic demand and indiscriminate opening operate as a clamp that suffocates the local industry, with the implicit hope that the external market compensates for what the domestic market destroys. Once again, a hope without anchor in reality.
Optimism mud feet
The Argentine government bets its political and economic capital to a successful narrative based on fragmentary data and precarious achievements. The figures of inflationalthough they show some moderation, they still reflect structural rigidities and considerable social costs. He Economic growth is, for now, a sustained promise in voluntary hypotheses more than in real indicators. And the international context, far from providing certainties, reinforces the need to rethink the strategic role of the country in a world in transition.
While the president proclaims that “the adjustment is paid by the caste”, inflation is still paying the changuito, the recession the industry and the country risk … the taxpayer. In this scheme, the strategy is not economical, it is theological: “You have to believe.” Believing that external credit will arrive just when the markets lower their guard. Believing that opening the economy without productive muscle is not a suicide, but a brave bet. Believing that the north still knows where it is going, even when their rating agencies say otherwise.
But as a cynical trader would say in the City: “If this is a plan, or it is very brilliant … or is too Argentine.”
And the most disturbing thing is that the first thing does not seem.
Director of Esperanza Foundation. Postgraduate professor at UBA and private universities. Master in International Economic Policy, Doctor of Political Science, author of six books.
Source: Ambito
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