Critics of Argentina’s president Javier Milei have already made up their minds: he is a lunatic and his plans will collapse on first contact with the real world. Argentina’s money will run out and the economy will grind to a halt. To some commentators, he is a ‘hard-right’ ideologue who will crash the economy within weeks. They say he’s like Liz Truss and Kwasi Kwarteng on roller-skates.
If you listen to those attacking Milei, you’d be forgiven for thinking the man in charge in Buenos Aires will precipitate yet another economic calamity in a country which has been stumbling from one disaster to another for almost a hundred years. But hold on. It turns out that the markets don’t quite see it like that. Following Milei’s victory in Sunday’s election, Argentinian assets are soaring in value. If that continues, there is just a chance that Milei’s plan might work.
Milei is certainly a radical. He plans to ditch the peso for the dollar, get rid of the central bank, and take a ‘chainsaw’ to a bloated public sector and welfare system. Armed with quotes from Friedrich Hayek, Milton Friedman and Ludwig von Mises, Milei is the most hardcore libertarian to come to power over the last couple of decades. Yet so far, Argentina’s benchmark Merval index likes what it sees: on the news of Milei’s victory, it rose by 21 per cent, marking its best daily performance in over 21 years. It has carried on rising since. The country’s dollar bonds rose strongly too and the black market peso fell as investors worked out that there would be less demand for the unofficial currency.
Perhaps this might only be a short-term boost. Even so, if Argentina does continue in its economic slump, it hardly seems fair to blame Milei entirely for Argentina’s woes.