| President Javier Milei during the opening legislative session of Congress, in Buenos Aires, Argentina, March 1, 2024 (AP photo by Natacha Pisarenko). |
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Argentina: Dozens of people were injured during a protest outside Argentina’s Congress yesterday as security forces pushed through a crowd of activists demanding higher pensions. The reform agenda of President Javier Milei has for months drawn weekly protests by retirees, with the support of community organizations, including workers’ unions and even local soccer fan clubs. (Reuters) |
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Our Take: While the weekly protests in Buenos Aires have drawn coverage a handful of times when they’ve turned violent, they are more notable for calling attention to something that isn’t happening in Argentina: broader opposition to Milei’s agenda. The far-right libertarian won the presidential election in 2023 promising strict austerity measures and radical economic reforms that observers assumed would be met with intense opposition, given that Argentina’s population was already mobilized following decades of economic instability. |
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Instead, Milei’s popularity has remained remarkably resilient, while his political movement has shown signs of momentum. In local elections in Buenos Aires on Sunday, Milei’s far-right La Libertad Avanza, or LLA, party won the most votes in a historical stronghold of the center right. |
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Overall, then, Argentines still appear willing to bear an enormous amount of short-term pain in exchange for reforms that lead to economic stability, and on that latter front, there have been signs of progress. Inflation has slowed, and the poverty rate fell from just over 50 percent to just under 40 percent between the first and second half of last year. To be sure, Milei’s reforms have included spending cuts that hit public sector employees and retirees particularly hard—hence, the protests—but the macroeconomic picture appears to be heading in the right direction. |
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Still, plenty of dangers remain. For one, a stabilized and even strengthened peso could weaken exports, as is already on display in Argentina’s beef industry. That in turn could affect inflows of hard currencies as well as government revenues. Meanwhile, Argentina’s economy is still vulnerable to external shocks from international factors outside of the country’s control—like, for instance, a global trade war or continued high interest rates in the United States. It was just these kinds of outside shocks that waylaid a previous attempt at structural reforms in the late 2010s under former President Mauricio Macri. |
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The challenge for Milei, then, is to get the foundations of Argentina’s economy to a more stable footing before international shocks threaten it or domestic opposition to his agenda crystallizes. The stakes are high—for him, but especially for the Argentines who are enduring such hardship in the hopes of future dividends. |