Hailed by Trump and Musk, is Argentina’s Milei an economic miracle maker?

Argentine President Javier Milei’s radical economic policies have led to an economic miracle despite predictions of doom and gloom from economists, academics and political opponents. Milei was the first foreign leader to meet President-elect Trump after November’s election, and he’s also been cheered by Elon Musk on X and in person at Musk’s Texas headquarters. 

Milei’s star continues to rise. 

“What President Milei has done in Argentina economically is nothing short of a miracle,” Joseph Humire, executive director of the Center for a Secure Free Society, told FOX Business.

“In less than a year, he was able to first stop the country from spiraling into hyperinflation because when he took office on December last 2023, the country was within days or weeks of getting into hyperinflation. So, he took some immediate actions. Then, he focused on reducing spending. Then, he focused on balancing the budget. And then, by the middle of 2024, he significantly curved the inflation. That was the initial recipe to be able to stabilize Argentina’s economy.”

ARGENTINA’S MILEI ELIMINATES DEFICIT, HAILED AS MODEL FOR MUSK’S ‘DOGE’

President of Argentina Javier Milei poses for a picture next to Tesla’s Elon Musk, left, at Gigafactory Texas April 12, 2024, in Austin, Texas. (Presidencia de la Nación Argentina/Handout/Getty Images / Getty Images)

Milei’s administration implemented stringent austerity measures, including significant cuts to public spending and subsidies. These actions led to a substantial decrease in monthly inflation, dropping from 25.5% in December 2023 to 2.7% in October 2024. The Argentine peso strengthened against the black market dollar, indicating increased confidence in the national currency. This appreciation reflects the positive reception of Milei’s economic policies by financial markets.

Martín Menem, president of Argentina’s Chamber of Deputies and the vice president of Milei’s political party, La Libertad Avanza, told FOX Business, “Today we have a fiscal surplus. We have lowered inflation. The economy is expanding. Credit is returning. Poverty is falling. Real wages are recovering month by month. We are lowering taxes. We are becoming attractive to local and foreign investors. With all this, expectations are growing, and every day we are getting closer to our goal, which is to rebuild the nation and the prosperity of Argentines.

“To have these results that we have never had, we are doing what has never been done before. The results show that President Milei’s path works. We have come to end the decline that the fiscal deficit generates, and we will work every day to deregulate the economy to return to the path of growth.”

Despite these successes, challenges persist. The austerity measures have led to increased unemployment and poverty, with over half the population affected. Additionally, the economy was projected to shrink by 3% in 2024, indicating that while stabilization efforts have yielded positive results, structural issues remain. These are some reasons why experts and economists still question Milei’s achievements, contrasting them with narratives and policies they consider contradictory.

A woman holds up a sign with the words “Milei psychoanalyze yourself” as part of a nationwide protest to defend public education against President Milei’s sharp budget cuts April 23, 2024, in Buenos Aires, Argentina. (Ricardo Ceppi/Getty Images / Getty Images)

FOX Business contacted two sources who signed a letter signed by 108 economists critical of Milei’s economic platform published leading up to the country’s election. Economist Pablo Bortz told FOX Business, “After rereading the letter we signed, I maintain my position regarding the letter, noting that the government abandoned the idea of dollarization.”

Another signatory, economist Matías Vernengo, said, “I maintain my position in the letter I signed because I believe that it is essentially correct. Inflation accelerated after Milei’s devaluation. The sustainability of relative stability in the nominal exchange rate remains to be seen.”

Roberto Cachanosky, an economist who was not part of the letter, told FOX Business, “The most contradictory thing about Milei’s speech and his policy is that, in his speech, he always maintained that the state is his enemy. That it should not intervene in the economy. That prices should be free and that the state steals with taxes. 

“Furthermore, as a deputy, he said that taxes were a hindrance to slavery. The reality is that his pro-market speech ended with a BCRA (Argentina’s Central Bank) that not only intervenes in the interest rate and left the exchange controls, but also maintained exchange controls throughout this year, which is a real confiscation of exporters.”

ARGENTINA’S JAVIER MILEI FLIPS INFLATION ON ITS HEAD EVEN AS POVERTY GROWS

Presidential candidate Javier Milei of La Libertad Avanza lifts a chainsaw next to Buenos Aires province candidate for governor Carolina Piparo of La Libertad Avanza during a rally Sept. 25, 2023, in San Martin, Buenos Aires, Argentina.  (Tomas Cuesta/Getty Images / Getty Images)

Milei’s government announced Argentina’s first budget surplus in 14 years on Friday, giving the self-styled libertarian another big win. Yet, criticism of some of his policies remains. 

Political analyst Antonella Marty told FOX Business, “Despite promises of reform, the much-touted adjustment targeting the so-called ‘political caste’ under President Javier Milei has failed to materialize. Instead, his administration is filled with underqualified officials, family members and social media operatives tasked with promoting a moral and ideological agenda. This agenda, often framed with a deeply religious and messianic tone, centers on a personalist model where dissent is not tolerated. Those who question the leadership are swiftly expelled from the fold.

“The brunt of the government’s adjustments has fallen disproportionately on the private sector, which faces heavier taxes and shrinking real wages. Since Milei took office, the private sector has lost 166,000 jobs, while the public sector has seen 64,000 layoffs. This has created a bleak scenario for consumption and poverty across the country. For instance, meat consumption — a cultural staple — has dropped by 11%, and 71% of families can no longer afford traditional asados. The rising costs of utilities, including electricity, water and gas, have only added to the strain.”

Argentinian President Javier Milei  (Daniel Bockwoldt/picture alliance via Getty Images / Getty Images)

Economist Diego Giacomini recently told FOX Business, “Milei says that he is going to return competitiveness to the private sector over time by opening the CEPO (allowing the free movement of capital) on the day that the exchange rate gap and inflation tend to zero. Today, the exchange rate gap is at 3%, and, according to the latest data, we are already there, and he has not yet opened the CEPO.”

“At the end, the economy will not be something distinctive of Javier Milei. As someone who uses and exploits the word liberty, absolutely everything he does in ethical, philosophical, philosophical-political terms, is at the antipodes of classical liberalism. So, when things end badly economically and socially, classical liberalism and liberty will be to blame. That is very serious.”

While some experts suggest President Milei’s policies have defied some initial economic criticisms by achieving significant fiscal and monetary improvements, the social costs and ongoing economic challenges suggest a complex and nuanced outcome.

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Milei, who arrived in Washington this weekend for Trump’s inauguration, met with the president-elect in November at the America First Policy Institute’s gala, where Trump congratulated the Argentine “on the job you’ve done for Argentina. … Make Argentina great again.”

“I think President Milei pulled out what many thought was the impossible. He was able to turn the economy at least in the positive direction,” Humire said. “There is a lot to be done. He must get rid of currency controls, attract more investment and increase the purchasing power of the Argentinian peso. It is very difficult to come into office at a high approval rating and then maintain the high approval rating all throughout your first year. Most presidents in the world dip a little bit by the end of the first year. President Milei has not.”

Reuters contributed to this report.