Argentina's return to free markets results in strong growth
‘Instead of talking about growth at Chinese rates, the world will soon be talking about growth at Argentine rates,” President Javier Milei of Argentina said in April. And here we are in July doing just that.
Argentina’s economy is growing at 7.7 percent, according to the latest year-over-year data. It grew by 1.9 percent in April, the most recent month for which data are available. The Chinese economy is growing at a rate of about 5 percent per year (if you believe the official statistics, which there are good reasons to doubt).
Argentina is achieving this growth not through a strategic industrial policy or a mercantilist trade policy. It’s achieving it by rolling back the overextended public sector, slashing the government budget, controlling the money supply, and removing price controls.
Milei eliminated rent controls in Buenos Aires, and the apartment market was flooded with new properties and the average real price went down. He turned a budget deficit into a surplus in his first full year in office. He eliminated half of the country’s cabinet departments.
When Milei took office in December 2023, inflation was 25 percent per month. In May, it was 1.5 percent. The initial shock of the policy change led to a spike in the poverty rate, but it has been falling since the second half of last year and is now lower than when Milei became president.
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The Milei policies demonstrate the strength of free markets. Democrats would be wise to try this in liberal US cities where they have been tempted into control freak policies.
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