Inflation of 211% in December 2023 has now fallen to 31.5% over the entire year 2025, a reduction by nearly seven. In two years, Javier Milei has transformed a budget deficit of 5% of GDP into a surplus, the first balance of Argentina’s public accounts since 2008. Yet 62% of Argentines express a negative opinion of the president in March 2026, with an approval rating that has fallen to 36.4%. Argentina thus documents one of the most striking paradoxes of contemporary political economy: the technical success of stabilization can coexist durably with majority disapproval.
This disjunction calls into question the classical liberal hypothesis that budgetary discipline automatically generates popular support. Despite a recession of 3.5% and a poverty rate exceeding 50% at the height of the crisis, Milei had maintained an approval rating around 50% during his first year. The shift occurs at the precise moment when the economy returns to growth.
The Fastest Budget Adjustment in Latin America
The federal primary deficit of 2.3% of GDP in 2023 transformed into a surplus of 1.8% in 2024, according to OECD data. This consolidation relied on a 27% reduction in public spending, concentrated on the public sector wage bill and subsidies for transportation and energy.
Argentina lowers its public spending from 40% of GDP between 2013 and 2023 to 31.4% in 2024, its lowest level since 2008. Milei eliminates approximately 52,000 public sector positions, representing a reduction of 9.6% to 15.7% of public payroll. The strategy favors brutal cuts over gradual reforms, accepting the immediate political cost to create an irreversible dynamic.
This draconian austerity enables Argentina to post a historic surplus of 0.3% of GDP in 2024, a performance anticipated by neither the IMF nor private analysts. Thanks to the real appreciation of the currency and inflation effects, the federal debt-to-GDP ratio reaches approximately 78-84% by the end of 2025, according to official data.
Disinflation Progresses Despite Monetary Turbulence
Monthly inflation exceeds 25% in December 2023 then falls to 2.7% in December 2024, the result of an near-freeze in the quantity of pesos in circulation and appreciation of parallel exchange rates. Monthly inflation reaches 1.9% in August 2025, its lowest level in five years.
Yet the December 2025 figure rises to 3%, marking the seventh consecutive month of accelerating inflation. This re-acceleration reveals the limits of the exchange-rate-based stabilization model, particularly when the peso appreciates cumulatively—inflation of 117% against depreciation of less than 30% in 2025.
Milei’s monetary policy relies on a crawling peg that limits monthly peso depreciation. Initially set at 2% per month until February 2025, then reduced to 1% per month until April, this policy artificially maintains a strong currency to anchor inflation expectations. At the time of the October 2025 elections, monthly inflation remained at 2% or higher, implying continuous real appreciation of the peso.
The Economy Rebounds But Inequality Worsens
The Argentine economy shows growth of 7.6% year-over-year in the second quarter of 2025, its strongest performance in nearly two decades. The IMF projects growth of 5% for 2026, refuting the catastrophic predictions of 2024.
This rebound masks persistent imbalances. Investment and private consumption each decline by 17.4% and 4.2% during the adjustment phase. Investment and industrial production levels remain alarming, raising questions about the sustainability of a model that privileges budgetary balance over capital accumulation.
The poverty rate jumps from 41.7% in the second half of 2023 to 52.9% in the first half of 2024, before declining to 38.1% in the second half of 2024. This sequence reveals the brutality of adjustment shocks on vulnerable populations, even in a context of macroeconomic recovery.
According to INDEC, wages grew above inflation in 2024, but fell below it in 2025 and early 2026. This deterioration in purchasing power partly explains the erosion of popular support despite macro stabilization.
The Decline of Presidential Popularity Defies Classical Theories
Milei’s approval rating falls from 41.4% in February to 36.4% in March 2026, a new low since taking office. Approval drops to 42% while disapproval climbs to 53% at the end of 2025, marking the shift toward a majority negative opinion.
This evolution contradicts the hypothesis that economic successes translate mechanically into political capital. Corruption scandals touching the president’s circle, notably his sister Karina Milei, have aggravated the deterioration of his image. Only 35% of respondents consider Milei credible, and 32% judge him honest.
Paradoxically, more than 75% of his voters remain convinced of their choice, without regret. This loyalty of the electoral base coexists with erosion of general opinion, suggesting growing polarization of Argentine society.
The midterm elections of October 2025 allow Milei’s party to exceed expectations and obtain a larger bench in Congress, consolidating his position for structural reforms in 2026. This electoral victory despite declining popularity illustrates the limits of opinion polls as predictors of electoral behavior.
The Risks of Phase Two: Structural Reforms and Social Fatigue
The primary objective becomes “the eradication of the extreme Peronist model of economic mismanagement as a political alternative.” The midterm elections serve as a de facto referendum on the Milei government. The electoral mandate provides the political capital necessary for structural reforms in five critical domains: labor market flexibility, tax rationalization, capital market development, trade liberalization, and judicial efficiency.
But these economic improvements are accompanied by rising healthcare and living costs, and reduced consumption, while patience for his reforms diminishes. The current account balance in the first quarter of 2025 becomes largely deficient at -5,191 million dollars, compared to a positive trade balance of 3,649 million in the first quarter of 2024.
The new monetary regime does not eliminate the possibility of another exchange crisis. Any negative economic shock could reanimate speculative pressure for devaluation. Continued dependence on the support of the U.S. Treasury further fragilizes the anchor of the exchange rate.
Argentine Experience as Laboratory for Radical Liberalism
Milei’s Argentina tests on a grand scale the capacity of a democratic government to conduct prolonged shock therapy against a majority hostile public opinion. Economists remain divided: former IMF chief Carmen Reinhart warns against “cumulative real appreciation that leads to the end of the stabilization program with strong depreciation,” while Alejandro Werner acknowledges the budget adjustment as “remarkable” while emphasizing the political risks.
This experience reveals a fundamental paradox of modern democracies: economic rationality can durably diverge from electoral rationality. Argentine presidents have historically governed despite low approval ratings. Cristina Fernandez de Kirchner governed for years with less than 40% approval, and Alberto Fernandez ended his term despite a corruption scandal.
Milei’s technical success—controlled inflation, balanced accounts, recovered growth—coexists with growing social rejection that questions the political sustainability of the orthodox liberal model. Between undeniable macro-economic progress and growing social fatigue, Argentina becomes the involuntary laboratory of a liberalism that functions economically but struggles to convince politically.