Two Years of Milei: Is Argentina's Libertarian Gamble a Miracle or Mayhem?

Two years into President Javier Milei's presidency, Argentina remains in the midst of one of the most ambitious economic overhauls attempted by any modern democracy. What began as shock therapy for an ailing economy evolved into a test of whether a country long plagued by populism, interventionism, and government spending can reinvent itself and be a thriving again. 

Argentina is moving past the initial chaos of Milei's early reforms. Expectations, results, and political reality are all colliding into an interesting intersection, especially in light of the recent midterm elections giving Milei a bigger mandate than I imagine Milei himself was anticipating. With yesterday marking the two-year anniversary of Milei getting elected into office, it is time to see where Milei stands and whether his libertarian gamble has paid off. 

Milei's Successes 

Much like I did during Milei's one-year anniversary, here are some of the indicators that show that Argentina is faring better than it was before Milei assumed the presidency: 

Inflation rate - Argentina has had a chronic inflation problem, as the country's inflation data from El Instituto Nacional de Estadística y Censos (INDEC) indicates. The increase in inflation that Argentina goes through in a month is what a typical Western nation goes through in a year, which gives an idea of the economic pain that Argentina endures. For the most recent month available, October 2025, that number was an increase of 2.3 percent. However, this is much lower than the peak of 25.5 percent that Argentina reached in December 2023 (Reuters). Argentina's annual inflation rate has not been this low since 2018. If Milei can continue with reducing inflation, it will show durable growth, investment, and social-economic stability.

GDP - As INDEC GDP data indicate, Argentina's GDP has been on an overall growth trajectory since Q4 2024. It cooled off a bit in Q2 2025 at -0.1 percent, but on a year-to-year basis, Argentina's economy expanded by 6.3 percent. Why did it not start growing before Q4 2024? Because Milei implemented shock therapy to the economy, including massive cuts to public spending, removing subsidies, a 54 percent devaluation, and tight monetary policy. These were all necessary measures to get hyperinflation under control, but they do mess with short-term economic output. 

Fiscal consolidation - Fiscal consolidation, which is the reduction of deficits through spending restraint, subsidy cuts, and  improved revenue discipline, has been one of the clearest markers of Argentina's policy shift under Milei. As this OECD report shows, Argentina achieving a primary surplus after years of chronic imbalances sharply reduced the need for money printing. Fiscal consolidation helps stabilize prices and expectations. These moves signal to investors and markets that Argentina is laying the groundwork for a more sustainable and growth-oriented economy. 

Capital markets - An August 2025 IMF report shows that Argentina regained access to capital markets ahead of schedule. Decades of defaults, capital controls, and runaway inflation effectively closed off Argentina from the global capital markets, leaving the country more reliant on domestic financing. According to the IMF, fiscal consolidation, monetary tightening, and foreign exchange rate liberalization rebuilt investor confidence enough to start opening up access once more. The reason why this is important is that it suggests restored and improving investor confidence, which is a key precondition for foreign investment, external financing, and sustainable growth. As long as there are not renewed or external shocks, this should hold for Argentina.

Areas for Improvement

While I commend Milei for these accomplishments, there is still work that needs to be done for Argentina to truly reform. I am not going to be able to cover everything, but these are a few that caught my eye.

Labor Market Pressure - INDEC measures what is "labor market pressure," which is a combination of unemployed, underemployed, and those seeking another job. This aggregate figure is at 30.5 percent, when it was at 29.7 percent the year before. This figure is concerning for Milei because it signals labor stress beyond the official unemployment rate. Essentially, it implies that Milei's reforms have yet to translate into widespread labor market confidence. This is an issue because without contracts, benefits, or stable incomes to make formal employment more attractive, Milei's economic growth will happen more slowly than he would like. 

Corruption and Civil Liberties - There was no improvement of Argentina's scoring in Transparency International's Corruption Perceptions Index (CPI). This can suggest that Milei's approach has not translated into stronger accountability, transparency, or control over corruption. PEN International also expressed concerns about freedom of expression declining since Milei came into power. On the other hand, Argentina's Freedom House score remains steady at 85 and Argentina is still classified as a Free Nation. Considering that Argentina was run by a military junta that was kidnapping citizens about half a century ago, this is a good thing. 

Cost of Living Pain - Even as inflation has decreased considerably by Argentinean standards, that does not mean that everything is hunky-dory. This was a paradox I experienced when I visited Argentina a couple of months ago, that the macroeconomic figures looked good, but things are still quite unaffordable. First, lower price increases do not ignore that prices continue to rise and that it's still expensive. Second, there are certain goods that skyrocketed. For example, the public services basket, which includes gas, transport, water, and electricity, increased by about 526 percent since December 2023. This is in contrast to the 164 percent by which the overall Consumer Price Index increased. In other words, the public services basket increased about three times the overall inflation. 

Food Prices and the Poor - This is also the case for food prices. Meat, dairy, and bread saw particular spikes in 2025. Food inflation is a persistent problem in Argentina, especially for the poor and those working in the informal labor market. Since these staples remain expensive for many households, it does not feel like gains are being made. Food prices rose to a new high plateau during the initial economic shock therapy in 2024, which hits the poor harder because a larger percent of their income goes to food. Milei is fixing the macroeconomy and doing so faster than anticipated. This is not unique to Argentina's economic shock therapy. It follows the same moral geometry that happens with any economic shock therapy. Why? The poor feel the costs the most because they are the least able to absorb those shocks. The question is how longer it will take for Milei to complete the transition, and how longer the poor can endure the associated costs.

Postscript

Given the mess that Milei inherited, I would say that he has done an outstanding job. Milei's first two years have shown that fiscal consolidation, tight monetary policy, and reducing public spending can bring inflation down, balance the budget, and increase economic growth. While these are major successes in comparison to what Argentina was like in 2023, there are still considerable challenges. The formal labor market has shrunk, informal labor remains large, and many households face economic stress, regardless of what official poverty statistics have to say. 

I brought this up when analyzing Argentina's monetary policy vis-à-vis the crawling band last October. Argentina needs to go beyond macroeconomic headline numbers. For Argentina to have long-term growth, Milei will need to address deep structural challenges alongside his macroeconomic reforms. This includes deregulating labor to encourage more formal hiring, simplifying the tax code, liberalizing trade to boost competitiveness, and phasing out subsidies and price controls, to name a few. Even with a stronger mandate from the midterms, Milei's reforms still face political pushback, social resistance, and institutional inertia that could slow or complicate the path to longer-term stability. But If Milei can navigate the landmines entailed in implementing these next steps, the foundations for long-term prosperity will be established and economic stability will become a norm for Argentina.

¡Viva la libertad, carajo!