Milei announces shock adjustment of 15% to Argentina’s GDP

Javier Milei, Argentina’s newly elected president, declared a bold plan on Tuesday to overhaul the country’s economy.

He announced a “shock adjustment” of 15% to Argentina’s Gross Domestic Product (GDP).

In his interview with journalist Manuel Adorni, Milei emphasized his goal of achieving fiscal balance by 2024’s end.

Milei also tackled the issue of public works in Argentina. He noted the government’s lack of funding and suggested transferring these projects to the private sector for completion.

Additionally, Milei plans significant cuts in public spending, aiming for a more Chilean-style private sector-driven system.

Highlighting the nation’s financial constraints, Milei warned of potential hyperinflation without fiscal adjustments.

He vowed to dismiss any minister proposing increased spending, underlining his commitment to financial discipline.

Addressing Argentina’s hyperinflation, which escalated to 142.7% in October, Milei promised to exert all efforts to prevent it.

His strategy includes a robust fiscal adjustment targeting a zero financial deficit.

Milei’s conversation with outgoing President Alberto Fernández was described as cordial and productive.

They discussed the government transition and various political issues, managing to express their differences politely.

Milei’s victory was significant in the recent election, winning in 20 of 23 provinces, including the autonomous capital, Buenos Aires.

His victory margin over opponent Sergio Massa was about 3 million votes.

Second Largest Economy in South America

Regarding Argentina’s economy, it ranks as the second-largest in South America and 22nd globally.

According to the World Bank, the nation’s 2022 GDP stood at $632.77 billion.

Argentina also holds a vital trade relationship with Brazil, exporting $15.34 billion and importing $13.10 billion last year.

The country’s inflation and poverty rates have risen sharply. Inflation reached 142.7% annually in October, with the central bank raising interest rates to 133%.

Additionally, the poverty rate in Argentina climbed to 40.1% in the first half of 2023, signifying a substantial increase in the number of people living in poverty.