Argentina’s Economy on Rise Heading Into Midterm Elections

Two years into Javier Milei’s presidency, Argentina’s economy is rebounding under his signature “chainsaw” reforms—marked by deep cuts, deregulation, and a radical shift in economic policy.

But will this be enough to persuade voters?

Argentina heads to the polls for its first midterm elections under Milei, a vote widely viewed as a verdict on his economic reforms.

Legislative elections will take place on Oct. 26, when half of the seats in the National Congress—127 in the lower house and 24 in the upper house—are being contested.

Recent polling data indicate that Milei’s La Libertad Avanza is gaining momentum heading into the midterms.

Despite defeating Milei’s party by a wide margin in the Buenos Aires Province election last month, the Peronist-Kirchnerist bloc, a coalition that blends left-wing tenets of Kirchnerism and Peronism, has seen its support wane.

Inflation in Argentina

Before Milei’s ascent to the presidency, Argentina had suffered under the boot of inflation.

In 2023, Argentina’s annual inflation rate was well above 200 percent, marking one of the highest levels since the hyperinflation era nearly 40 years ago. Monthly inflation exceeded 25 percent.

Over the years, consumer prices for a broad array of goods and services accelerated, from food to housing to transportation.

Recent inflation figures suggest that the situation has stabilized.

According to government statistics, the monthly inflation rate was below 2 percent in August for the fourth consecutive month.

The 12-month inflation rate has declined for 16 straight months, sliding below 34 percent in August.

Looking ahead, private sector economists anticipate that the consumer price index will finish 2025 at around 30 percent year-over-year.

Growth Momentum

Argentina’s economy—the third largest in Latin America after Brazil and Mexico—expanded by 6.3 percent year over year in the second quarter, marking the third consecutive quarter of growth.

The economy is reversing the downturn of the previous year, stoked by the Milei government’s self-described shock therapy.

The country’s growth has been fueled by strengthening exports, improving business and consumer confidence, and rebounds in several key sectors—agriculture, manufacturing, financial intermediation, and retail.

Overall, Argentina’s central bank anticipates 2025 growth will be 4 percent. If accurate, this year’s expansion would be up from negative 1.7 percent in 2024 and negative 1.6 percent in 2023.

While Argentina represents less than 1 percent of global GDP, RBC economists say that its success—or failure—could have consequences for impoverished states.

“Any significant economic success in a long-troubled economy would be welcomed not just by the country itself, but viewed as a blueprint for the many other poor countries that have failed to climb the prosperity ladder,” economists at RBC Global Asset Management in a Sept. 9 note.

Declining Poverty

In the first half of the year, Argentina’s poverty rate decreased to 31.6 percent, down from approximately 38 percent in the second half of 2024, according to the National Institute of Statistics and Censuses.

Shortly before Milei took office in December 2023, the national poverty rate had reached nearly 42 percent, fueled by rampant price inflation and currency devaluation.

Meanwhile, the proportion of households living below the poverty line was 24.1 percent, down from nearly 29 percent, in the first six months of the year.

The news captured Milei’s attention.

“Poverty continues to decline. Freedom advances or Argentina retreats. Long live freedom, damn it!” Milei wrote on social media.

Argentina’s Finances

In 2023, Argentina ran a primary fiscal deficit of roughly 5 percent of GDP.

Following a 31 percent reduction in public spending under Milei’s 2024 reforms, the country posted a primary surplus of 0.7 percent of GDP in the first half of 2025—its first in 14 years.

Rather than taking a pen knife to the budget, Milei and his team used the chainsaw.

Energy and transportation subsidies were cut by more than 60 percent, provincial cash transfers were slashed by more than 90 percent, and 48,000 government jobs were eliminated.

Other policy reforms were implemented, including adjustments to pension eligibility, the abolition of import licenses, restrictions on central bank financing of budget deficits, and the privatization of state-owned enterprises.

Black ink on the public ledger is expected to continue after the federal government posted its eighth consecutive monthly budget surplus in August, with total revenues rising and expenditures declining.

Last month, the president unveiled the government’s draft 2026 budget, projecting a fiscal surplus of 1.5 percent of GDP.

The financial surplus—after debt payments—is forecast to be 0.3 percent of gross domestic product.

As a result of better fiscal management, Milei proposed spending increases in education, health care, and pensions.

“There is no other way but that of fiscal balance,” the president said in a 15-minute national address.

“Today, the future of Argentina depends fundamentally on one thing: that the people and the political class commit to fiscal order. This is not just a draft bill; it is the ratification of our commitment to get the country back on its feet.”

Jacob Burg and Reuters contributed to this report.