Argentina under Milei: a story of two economies
Argentina’s Debt‑Loaded Households: A Two‑Digit Crisis
Official data reveal that nine out of ten Argentine households are in debt. The issue is amplified by a staggering number of defaults on loans, pushing consumers into a credit spiral that is difficult to escape.
Destabilising Gains: Pretend Affluence versus Real‑World Poverty
President Javier Milei entered office in December 2023, championing a drastic reduction in state spending and a purge of runaway inflation. The monthly inflationary rate dipped to a five‑year low in May, seemingly a triumph for austerity.
- Inflation is curbed, but the Peso is devalued.
- State subsidies were slashed. The result is prohibitive costs for housing, health care and education for millions.
- Consumer spending dropped heavily last year. A tentative rebound is uneven; the rich are buying cars and apartments, while the poor cannot afford shoes or food.
Cars and Real Estate: A Booming Sector for the Rich
Car sales and real‑estate investments have surged. In the first half of 2025, sales are up nearly 80 % from 2024, according to the ACARA association. Mortgage activity is also higher than the entirety of 2024.
“The first half of 2025 is the best in seven years,” argued car‑seller Blas Morales. “Loans have become cheaper, and a tax amnesty has invited roughly billions of US dollars that Argentines had previously hid under mattresses and in offshore accounts.”
Domestic Tourism: A Plummet amid an Export Boom
While a stronger Peso benefits overseas travel, domestic tourism has been hit hard. Between January and April, Argentina welcomed only two million visitors— a decade‑low— while six million citizens travelled abroad, a 70 % increase over the same period in 2024.
Income Inequality: The Upper Class Keeps Rising
The economic recovery has largely benefited the upper class, which processes no more than six percent of the population. Consulting firm Moiguer’s report noted that months of recession were not equal; the recovery actually increased income disparity.
- Half of Argentines say they cannot make ends meet.
- A third postponed planned purchases to pay for necessities.
Mid‑Class Wipe‑Out: Job Losses and Wage Stagnation
State‑workers’ union ATE reported 40,000 job losses under Milei. Rodolfo Aguilar, head of ATE, said high‑end car registrations are rising while food consumption is falling—a sign that the middle class is being wiped out.
Meanwhile, Fernando Savore, head of the Federation of Small Businesses, warned that a job no longer guarantees financial stability. Wages cannot keep pace with rising gas, electricity and transport prices, or school fees.
Credit Buying and Essential Consumption
Hard‑core credit use has surged: people are buying only necessities such as pasta and tomato purée, refusing anything that is not essential. Items like candy and desserts are now essentially out of reach.
Overall, the Argentine economy sits on a precarious high‑inflation stead, with the middle class squeezed by rising costs, shrinking wages, and an acute debt crisis.
