How is Argentina's economy faring after one year of President Milei's reforms? Has ordinary people's lives improved?

From a historical perspective, Argentina’s economy contracted sharply in 2024 (by around −3.5%), but rebounded strongly in 2025—primarily driven by restored investor confidence following fiscal consolidation and export-led growth. Entering 2026, the base-effect advantage has waned, and the domestic demand–suppressing impact of austerity measures has taken hold; thus, the slowdown in GDP growth is both expected and consistent with broader trends. Currently, the economy is neither accelerating nor sharply decelerating—it is experiencing a moderate, orderly slowdown while retaining underlying resilience. The IMF and World Bank project Argentina’s full-year 2026 GDP growth at approximately 3.0%–3.5%, and first-quarter data broadly aligns with this trajectory. Second, domestic demand remains weak, while external demand is robust—exports continue to serve as the primary engine of Argentina’s economic recovery. External demand is strong: In Q1 2026, Argentina’s merchandise exports reached USD 21.9 billion, up 16.9% year-on-year; imports stood at USD 16.3 billion, down 7.3% year-on-year. As a result, Argentina recorded a trade surplus of USD 5.5 billion—the main driver of economic growth. Argentina’s export growth stems largely from stable prices for agricultural commodities such as soybeans and corn, increased output from the Vaca Muerta shale oil and gas project, and double-digit growth in lithium exports—fueled by surging global demand for new-energy technologies. Speaking of exports, Milei’s energy development strategy deserves special attention—because it is fundamentally reshaping Argentina’s trade balance. In 2025, Argentina achieved its first energy export surplus in nearly two decades. Oil production is projected to reach one million barrels per day by 2027–2028. The VMOS pipeline project—a 437-kilometer link from Vaca Muerta on Argentina’s Atlantic coast to Punta Colorada—jointly developed by YPF, Chevron, and Shell with USD 3 billion in investment—is scheduled to begin operations by end-2026, enabling the first-ever Very Large Crude Carrier (VLCC) shipments to Asia. Natural gas is Milei’s next priority after oil. Argentina is reversing its former dependence on Bolivian gas imports and plans to build an LNG export terminal using Golar LNG’s floating units. Milei’s RIGI investment incentive regime—which offers 30-year tax stability, unrestricted profit repatriation, and accelerated depreciation for projects exceeding USD 200 million—has attracted over USD 6 billion in committed new investment. With a breakeven cost of USD 36–45 per barrel, the Vaca Muerta field remains competitive even during severe economic downturns. Horacio Marín, CEO of YPF, stated that the company can profitably develop the entire Vaca Muerta basin at USD 45 per barrel. Yet domestic demand remains sluggish and clearly under pressure: Private consumption grew only 1.2% year-on-year—far below the over-5% growth recorded across all of 2025. Fixed capital formation (investment) rose 2.9% year-on-year—an improvement, yet real estate and manufacturing investment remain slow to recover due to high interest rates and policy uncertainty. Government consumption edged down 0.8% year-on-year, reflecting fiscal tightening. Overall, Argentina’s economy in Q1 2026 exhibits a classic “externally driven” profile. Exports contributed nearly 60% of GDP growth, whereas consumption and investment combined accounted for less than 40%.

The Economist cover story | Interview with Argentine President Milei: 'My contempt for the state is infinite.'

People who have known me for 50 years know I am a passionate person—and I have always been passionate. The idea that people should have role models is deeply authoritarian. Those who criticize forms and models are authoritarian, because they believe the only valid form is the one they themselves use—no other way exists. But there are other ways. Who are these journalists? What qualifies them to define what is or isn’t legitimate? They control the forms and models. That is brutal authoritarianism. In other words, fortunately, everyone is different. The Economist: I’d just like to ask a few final questions—on international issues. China has honored its swap line commitment—I believe it was USD 5 billion in June. Overall, they seem very willing to cooperate with Argentina. Javier Milei: Our relationship with China is excellent. The Economist: What do they expect in return? Javier Milei: Nothing. That’s wonderful. They’re an outstanding partner. They ask for nothing in return. He [China] only asks that I not bother them. That’s wonderful. That’s wonderful. They’re truly wonderful. I swear to you—they ask for nothing. Nothing. They simply want peaceful trade. You know, our economies are complementary. So, for the welfare of the Argentine people, I must deepen commercial ties with China. Why? Because our economies complement each other. The Economist: Doesn’t the nature of China’s government matter at all? Javier Milei: Trade isn’t conducted by governments—it’s conducted by people. You can sell to whomever you wish. So what’s the issue? I’ve said this repeatedly—even during my campaign. Yes. Now you want to ask about my political stance? My stance is to stand with the United States and Israel. Do you harbor any doubt about that? The Economist: If you believe good relations with President Trump benefit Argentina—as we discussed regarding investment—perhaps the same applies to the IMF. Then aren’t you concerned that strained or more complicated relations with leaders like Lula of Brazil or Sánchez of Spain could harm Argentina? Javier Milei: What actually happened? When I attended the G20 summit in Brazil, my finance minister and Brazil’s finance minister signed an agreement to help boost Argentina’s exports. So who cares? In other words, I don’t need to be friends with Lula. No. What matters is achieving trade between Argentina and Brazil. Selling natural gas to Brazil would be beneficial for me. I mean—no, I won’t be friends with Lula, but I bear institutional responsibility. I am tasked with defending Argentina’s interests. The Economist: Is it the same with Spain? Javier Milei: What actually happened? Haven’t they just reinstated their ambassador? They had withdrawn him. The Spanish judiciary appears to have vindicated my position. Let me repeat: All I do is defend Argentina’s interests. The Economist: Do you plan to withdraw entirely from the Paris Agreement? Javier Milei: No. All I can say is that my policy on these matters aligns with the G20’s position.

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Milei Discusses Argentina LNG Project with Eni CEO

Milei Discusses Argentina LNG Project with Eni CEO

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