Milei leaves economists and experts speechless: "It's time for the world to wake up and see Argentina's miracle."

Argentina's economy has become the biggest positive surprise for emerging markets, and almost for the global economy, over the past year and a half. Javier Milei's arrival at the Casa Rosada (the Casa Rosada) occurred amid deep skepticism among experts, economists, and investment banks, who viewed this politician as just another populist "charlatan" (redundancy intended) who had come to power on the basis of impossible promises and a crazy economic plan that couldn't be implemented in practice and would result in more recession and poverty in Argentina. However, Javier Milei is not only fulfilling his plan , it's actually working. Argentina's economy has emerged from recession, GDP is growing strongly, poverty is falling rapidly , real wages are rising, and inflation is moderating. Little by little, banks such as JP Morgan, BBVA, and Commerzbank (and also the prestigious weekly The Economist) have begun to admit that Milei's liberal policies are working despite the still very fragile situation of Argentina's finances (success is by no means guaranteed, given that the starting point was a deep coma economy). The latest to jump on Milei's bandwagon is the prestigious analyst Matthew Lynn, in a column in The Telegraph, where he calls on the world to wake up to witness Milei's economic miracle in Argentina .

Last week, the ratings agency Moody's granted Argentina its second rating upgrade since libertarian President Javier Milei came to power. With year-on-year inflation at 39% (it was above 200% at the end of 2023) and the economy growing at a rate of 6%, this "is further evidence of the spectacular turnaround the country has experienced. Growth has accelerated, inflation is beginning to come under control, rental prices are falling, and its debt is becoming increasingly manageable. The alarmist warnings of economic orthodoxy, which predicted that Milei's experiment in cutting the size of the state would end in disaster, have turned out to be completely wrong."

Argentina's economy is enjoying a powerful recovery, marked by rising real wages, deflation (it has fallen from 292% at the end of 2023 to 39% today), and the improvement of "social" indicators such as the poverty rate , which has plummeted sharply. Not only that, but last week another revealing piece of information emerged that has also surprised some analysts and market participants: Javier Milei's liberal policies have caused wages to increase their weight in the economy, while corporate profits have lost ground . This may seem contradictory to certain sectors or groups that tend to associate liberalism with an ideology that directly "favors" businesses. However, greater real economic freedom often results in greater competition and, therefore, lower profit margins for businesses. This is what theory says, and now, practice in Argentina. Argentina is recovering based on increased consumption and investment.

"The only question now is: when will the rest of the world wake up to the Argentine miracle? While France scraps holidays to reassure bond markets, Chancellor Rachael Reeves struggles to plug the holes in the UK's financial statements, and even the US bond market worries about the independence of the Federal Reserve, one country—and a very unexpected one at that—is getting a rating upgrade," says Lynn.

Last week, Moody's upgraded Argentina's rating, a country characterized by bailouts and mismanagement for 50 years. The agency raised the rating from Caa3 to Caa1 . More importantly, Moody's own report cites "the extensive liberalization of foreign exchange and (to a lesser extent) capital controls" as a reason for a more optimistic outlook. Technically, it's still considered a "junk" bond, but it is true that this is a country that has recorded nine defaults in the last 200 years, including the largest in the history of the IMF. "But the trend is unequivocally positive," Lynn assures.

However, Lynn points out in The Telegraph that this is just one indicator among many. Overall, the economy is expected to grow by 5.7% this year, despite massive cuts in public spending and the "chainsaw" the president applied to government employment and many other items that stimulated public spending and, consequently, GDP. On the other hand, inflation fell to 1.6% monthly in June, which obviously "isn't Swiss stability, but it's much lower than the more than 200% that prevailed when Milei took office," Lynn explains.

The IMF has also renewed the significant loan granted to the country under the previous administration. Rents, a serious problem that made housing unaffordable for many, have fallen by 40% in one year after the government eliminated all controls , triggering a flood of real estate purchases on the market. Bond prices are rising, and the government is once again seeking financing from global markets.

Lynn admits that the challenges remain many and that Argentina's economy is far from out of the doldrums, but the situation has changed dramatically in a short time: "There is one clear observation: in the 18 months that Milei has been in power, the Argentine economy has been completely transformed . She has achieved this by drastically reducing the size of the state. Promising economic 'shock therapy,' the government has laid off more than 50,000 public workers, closed or merged more than 100 state agencies, paralyzed public works, cut energy and transportation subsidies, and even returned the national budget to surplus. Although she has not kept all of her promises (such as replacing the peso with the dollar as the official currency), she has advanced faster and more profoundly in economic liberalization than any modern politician," notes this economist.

Lynn draws on his archives and memory to recall in his column that the results contrast markedly with the disaster that many economists had predicted—and probably expected—a catastrophe. Upon taking office, 103 leading economists, including French economist Thomas Piketty , issued a public letter warning that "seemingly simple solutions may be attractive, but they are likely to cause more devastation in the real world." That hasn't happened: Argentina is recovering from decades of mismanagement.

"The relevant question is: when will the rest of the world realize this? Because most of the economic and political elite still believe that growth is only driven by public spending, that regulation encourages innovation, that 'national champions' should guide new industries, and that the private sector should only follow the Treasury. This is seen in the United Kingdom with the National Wealth Fund, in the European Union with regulations that border on the Kafkaesque, in the United States with Trump imposing tariffs by decree, and above all in China, where cars, aerospace, and artificial intelligence receive massive state support," says Lynn.

This expert believes that at this time, the entire world is moving toward greater public and state intervention, while "only Argentina is heading in a different direction. Perhaps because subsidies, controls, and protectionism had turned it into a lost cause, it was willing to try the opposite path. Today, the fruits are visible: free markets and a reduced state are proving to be the way to reactivate growth, and Milei is proving it once again. Moody's and other agencies have already warned of this—and perhaps one day voters and politicians around the rest of the world will too," this expert concludes.