Latest news with #Argentines'
Miami Herald
07-07-2025
- Business
- Miami Herald
Argentina's Javier Milei Keeps Proving His Critics Wrong
Just months ago, Argentina seemed destined for another economic collapse: soaring poverty, runaway inflation and dire warnings from economists that President Javier Milei's radical austerity measures would choke growth. Instead, the economy is expanding at a pace few thought possible - leaving Milei's legions of critics scrambling for explanations. In a stunning reversal, Argentina's economy posted a 7.6 percent year-over-year growth rate in the second quarter of 2025 - its strongest in nearly two decades - fueled by deregulation, sharp cuts to public spending and the loosening of currency controls. Retail sales, manufacturing and finance all surged, helping consumer spending jump nearly 3 percent from the previous quarter. Since assuming office in December 2023, the firebrand libertarian economist has slashed government expenditures and secured a $20 billion deal with the International Monetary Fund (IMF). His administration promised to dismantle decades of state intervention in favor of free markets - policies that many observers warned would deepen recession and spark social unrest. Part of the turnaround has been Milei's dismantling of el cepo, the restrictive system of exchange controls first imposed in 2011 that prevented companies from moving profits abroad and limited Argentines' access to dollars. After he lifted the restrictions, the peso was allowed to float within a managed band, narrowing the gap between official and black-market exchange rates. Reserves at the central bank climbed to their highest level in two years, bolstered by IMF funds, a $5 billion swap line with China and fresh loans from multilateral banks. Milei also ripped up Argentina's rent-control law in late 2024, removing limits on lease terms and rent increases that had discouraged landlords from renting. Within months, the supply of rental housing in Buenos Aires jumped by 195 percent, according to the city's real estate observatory, and median asking prices fell by about 10 percent as more apartments returned to the market. Some leftist and socialist organizations, including the Socialist Workers' Party (PTS) and the Workers' Left Front, criticized the move at the time, arguing it favored landlords at the expense of tenants. But the reality has so far borne out the opposite: supply has soared. On Zonaprop, one of Argentina's largest real estate platforms, traditional rental listings surged from about 5,500 before the reform to over 15,300 - a 180 percent increase - with a third of that rise happening in just the first month after deregulation. "We have the best president in the world," Argentina's economy minister, Luis Caputo, wrote on X as he shared the recent growth figure. The surge in GDP has defied predictions from financial institutions, including the IMF, that growth would stagnate. On a June 18 panel hosted by the Peterson Institute for International Economics, Harvard economist Carmen Reinhart warned: "What you begin to see is cumulative real appreciation and then the end of the stabilization program with a big depreciation. We've seen this story before in Argentina." Former IMF official Alejandro Werner acknowledged Milei's fiscal adjustment as "remarkable" but cautioned that its sustainability depends on navigating political risks and avoiding another exchange-rate shock. "The next election might show that he has completed the first phase of consolidating political support for reforms, but the path is risky," Werner said. The strongest case for optimism has been Milei's success in driving down inflation. In May, consumer prices rose just 1.5 percent - the lowest monthly figure in five years, according to Argentina's national statistics agency. That decline is widely seen as a political and economic turning point. Still, some economists urge caution. "One has to consider in this disinflation process that we've accumulated a very high inflation rate throughout Milei's term," said Guido Agostinelli, an economist and professor at the University of Buenos Aires, in an interview with Newsweek. "That was driven both by the money supply inherited from the previous administration and by Milei's own decisions, like the exchange rate adjustment when he took office." Agostinelli noted that inflation peaked at 25.5 percent in December and has since slowed month over month, but warned the decline is deceiving because it is at least partly driven by falling wages and collapsing consumption. "Since there is no strong demand, prices naturally don't rise as one might expect given higher input costs in industry and commerce," he explained. He added that the relatively stable exchange rate - backed by IMF lending and new debt - has also helped cool price pressures, at least for now. Yet, the government's fiscal overhaul and monetary tightening have come at a steep social cost. Poverty, while down from its December peak of 53 percent, still affects 38 percent of Argentina's population. In April, a general strike paralyzed Buenos Aires as unions protested budget cuts and reduced government transfers. Even Milei's allies acknowledge the precariousness of the moment. José De Gregorio, a former central bank governor in Chile, said at the Peterson Institute panel: "I have to admit they are doing the right things. They have a very good chance to succeed. But we know how hard it is here." While Milei's sharp fiscal and monetary tightening has won praise for restoring stability, economists warn Milei's recovery rests on a fragile foundation. As Agostinelli noted, that the current disinflation indicates collapsing demand that threatens to reanimate a recession that ended just last year. "Since there is no strong demand, prices naturally don't rise as one might expect given higher input costs," he said. Martín Redrado, former head of Argentina's central bank, cautioned that the country risks taking the wrong lessons from taming its inflation without addressing deeper structural challenges. "We've settled for defeating inflation, but we shouldn't be complacent," Redrado told Los Andes. He pointed to the lack of a comprehensive tax overhaul and persistent barriers to corporate capital flows as signs the recovery is not yet secure. External factors also pose serious risks. Global conditions - particularly the policies of Milei's ally, U.S. President Donald Trump - have weakened Argentina's key export markets. Trump's trade war has driven down prices for oil and agricultural commodities, reducing Argentina's export earnings and complicating Milei's effort to build reserves and attract investment. As The Economist reported, Trump's economic brinkmanship "makes for risk-averse investors," and Argentina, with its reliance on IMF lending and an overvalued peso, remains highly exposed to external shocks. Yet despite warnings about volatility ahead, Milei appears convinced that the economy is firmly on the path to recovery. On television, he keeps repeating his now-familiar refrain: "Instead of talking about growth at Chinese rates, the world will soon be talking about growth at Argentine rates." 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Newsweek
07-07-2025
- Business
- Newsweek
Argentina's Javier Milei Keeps Proving His Critics Wrong
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Just months ago, Argentina seemed destined for another economic collapse: soaring poverty, runaway inflation and dire warnings from economists that President Javier Milei's radical austerity measures would choke growth. Instead, the economy is expanding at a pace few thought possible — leaving Milei's legions of critics scrambling for explanations. In a stunning reversal, Argentina's economy posted a 7.6 percent year-over-year growth rate in the second quarter of 2025 — its strongest in nearly two decades — fueled by deregulation, sharp cuts to public spending and the loosening of currency controls. Retail sales, manufacturing and finance all surged, helping consumer spending jump nearly 3 percent from the previous quarter. Since assuming office in December 2023, the firebrand libertarian economist has slashed government expenditures and secured a $20 billion deal with the International Monetary Fund (IMF). His administration promised to dismantle decades of state intervention in favor of free markets — policies that many observers warned would deepen recession and spark social unrest. Argentina's President Javier Milei holds up a chainsaw as he arrives to speak at the Conservative Political Action Conference, CPAC, at the Gaylord National Resort & Convention Center, Thursday, Feb. 20, 2025, in Oxon Hill,... Argentina's President Javier Milei holds up a chainsaw as he arrives to speak at the Conservative Political Action Conference, CPAC, at the Gaylord National Resort & Convention Center, Thursday, Feb. 20, 2025, in Oxon Hill, Md. More AP Photo/Jose Luis Magana The Milei Method Part of the turnaround has been Milei's dismantling of el cepo, the restrictive system of exchange controls first imposed in 2011 that prevented companies from moving profits abroad and limited Argentines' access to dollars. After he lifted the restrictions, the peso was allowed to float within a managed band, narrowing the gap between official and black-market exchange rates. Reserves at the central bank climbed to their highest level in two years, bolstered by IMF funds, a $5 billion swap line with China and fresh loans from multilateral banks. Milei also ripped up Argentina's rent-control law in late 2024, removing limits on lease terms and rent increases that had discouraged landlords from renting. Within months, the supply of rental housing in Buenos Aires jumped by 195 percent, according to the city's real estate observatory, and median asking prices fell by about 10 percent as more apartments returned to the market. "We have the best president in the world," Argentina's economy minister, Luis Caputo, wrote on X as he shared the recent growth figure. The surge in GDP has defied predictions from financial institutions, including the IMF, that growth would stagnate. On a June 18 panel hosted by the Peterson Institute for International Economics, Harvard economist Carmen Reinhart warned: "What you begin to see is cumulative real appreciation and then the end of the stabilization program with a big depreciation. We've seen this story before in Argentina." Former IMF official Alejandro Werner acknowledged Milei's fiscal adjustment as "remarkable" but cautioned that its sustainability depends on navigating political risks and avoiding another exchange-rate shock. "The next election might show that he has completed the first phase of consolidating political support for reforms, but the path is risky," Werner said. The strongest case for optimism has been Milei's success in driving down inflation. In May, consumer prices rose just 1.5 percent — the lowest monthly figure in five years, according to Argentina's national statistics agency. That decline is widely seen as a political and economic turning point. Still, some economists urge caution. "One has to consider in this disinflation process that we've accumulated a very high inflation rate throughout Milei's term," said Guido Agostinelli, an economist and professor at the University of Buenos Aires, in an interview with Newsweek. "That was driven both by the money supply inherited from the previous administration and by Milei's own decisions, like the exchange rate adjustment when he took office." People demonstrate during a protest of pensioners against the government of Argentina's President Javier Milei in front of the National Congress in Buenos Aires on March 19, 2025. People demonstrate during a protest of pensioners against the government of Argentina's President Javier Milei in front of the National Congress in Buenos Aires on March 19, 2025. Photo by Luis ROBAYO / AFP) (Photo by LUIS ROBAYO/AFP via Getty Images Agostinelli noted that inflation peaked at 25.5 percent in December and has since slowed month over month, but warned the decline is deceiving because it is at least partly driven by falling wages and collapsing consumption. "Since there is no strong demand, prices naturally don't rise as one might expect given higher input costs in industry and commerce," he explained. He added that the relatively stable exchange rate — backed by IMF lending and new debt — has also helped cool price pressures, at least for now. Yet, the government's fiscal overhaul and monetary tightening have come at a steep social cost. Poverty, while down from its December peak of 53 percent, still affects 38 percent of Argentina's population. In April, a general strike paralyzed Buenos Aires as unions protested budget cuts and reduced government transfers. Even Milei's allies acknowledge the precariousness of the moment. José De Gregorio, a former central bank governor in Chile, said at the Peterson Institute panel: "I have to admit they are doing the right things. They have a very good chance to succeed. But we know how hard it is here." Can It Last? While Milei's sharp fiscal and monetary tightening has won praise for restoring stability, economists warn Milei's recovery rests on a fragile foundation. As Agostinelli noted, that the current disinflation indicates collapsing demand that threatens to reanimate a recession that ended just last year. "Since there is no strong demand, prices naturally don't rise as one might expect given higher input costs," he said. Martín Redrado, former head of Argentina's central bank, cautioned that the country risks taking the wrong lessons from taming its inflation without addressing deeper structural challenges. "We've settled for defeating inflation, but we shouldn't be complacent," Redrado told Los Andes. He pointed to the lack of a comprehensive tax overhaul and persistent barriers to corporate capital flows as signs the recovery is not yet secure. External factors also pose serious risks. Global conditions — particularly the policies of Milei's ally, U.S. President Donald Trump — have weakened Argentina's key export markets. Trump's trade war has driven down prices for oil and agricultural commodities, reducing Argentina's export earnings and complicating Milei's effort to build reserves and attract investment. As The Economist reported, Trump's economic brinkmanship "makes for risk-averse investors," and Argentina, with its reliance on IMF lending and an overvalued peso, remains highly exposed to external shocks. Yet despite warnings about volatility ahead, Milei appears convinced that the economy is firmly on the path to recovery. On television, he keeps repeating his now-familiar refrain: "Instead of talking about growth at Chinese rates, the world will soon be talking about growth at Argentine rates."
IOL News
13-06-2025
- Business
- IOL News
Dollar-obsessed Argentines have a newfound love for buying gold
Gold is winning over the hearts of Argentines, a nation once almost irrationally devoted to the dollar. Argentina's deep-rooted reliance on the greenback - the country ranks among top holders of the US currency, according to estimates by economists and former central bank officials - is now being challenged by a growing appetite for gold. From bullion and small bars to exchange-traded funds, Argentines are increasingly turning to the precious metal as an alternative store of value. The shift signals a profound change in investor psychology as the dollar no longer offers the same inflation hedge it once did. The ongoing cost-of-living surge in the US, coupled with a rise in the peso under President Javier Milei, has diminished the greenback's lure. For many Argentines, it is now merely a 'second-best' choice among safe-haven assets. The recent removal of foreign exchange controls for individual investors has accelerated that trend. Argentines can now purchase gold directly in pesos, even through interest-free installment plans, eliminating the need for dollars. That opened the door for small savers in search of a more stable store of value. 'It is becoming very trendy,' said Leonardo Echegoyen, director at Banco Piano, one of the few Argentine banks that legally sells physical gold with a certificate of origin and a purity rating of 999.9 parts per 1 000, the only type of gold that can be sold abroad. 'People want to earn a return on their dollars, and they're looking for that return in this commodity,' he said. Another driver for Argentines' newfound love for gold are fears that the US dollar might lose more of its value. The US currency is already down 7.5% against a basket of international currencies since the beginning of the year, after surging 4.4% in late 2024 after Donald Trump's election win. 'Little by little, people are starting to understand that monetary assets should be invested in something,' said Juan Piantoni, chief executive officer of Ingot, a safe deposit box provider in Argentine. Argentines have harbored a deep distrust of their banking system since the 2001 financial crisis, when dollar deposits were forcibly converted into pesos. That trauma left an estimated $200 billion (R3.6 trillion) outside the formal financial system - stashed in safe deposit boxes, real estate, or even unconventional hiding spots like mattresses. Echegoyen recalls one customer who brought in a stack of $100 bills fused into a solid block after storing them in a kitchen pipe that burst. 'Gold is more practical for people who don't know where to keep cash without it getting ruined,' he said. With a client base of around three million, Banco Piano has quadrupled the volume of gold imports from Switzerland in 2025. After making just two shipments in all of 2024, the bank has completed five so far this year. Not surprisingly, gold is gaining space in Argentines' safe deposit boxes - a place traditionally reserved for US dollars. 'Storing dollars in a safe deposit box isn't common practice in most countries. It's a uniquely Argentine habit,' Piantoni said. The logic, he explains, is simple: safe deposit boxes are meant for valuables that need to stay out of the reach of others. Globally, the price of gold has jumped more than 27% over the past year, hovering near record highs above $3 300 an ounce. The surge has been fueled by geopolitical tensions, stubborn price pressures and mounting expectations of interest rate cuts by major central banks. In Argentina, gold in jewellries is priced at around $114 per gram, with a buy-sell spread of 10% to 15%, positioning it as a medium- to long-term investment. Some purchases can be made in three or six interest-free installments, while banks are offering cash back of up to 30% - an attractive perk in an economy still battling with double-digit inflation. Argentines are allowed to buy as much as $7 200 in gold per month without disclosing the source of funds. A recent government bill aims to raise that cap to $12 000. Brokers, meanwhile, provide access to gold via exchange-traded funds like SPDR Gold Shares, known by its ticker GLD, rather than physical bullion. 'There's more demand for gold this year,' said Fabio Saraniti, a partner at local broker Win Securities. 'That happens because when financial assets rise, people want to buy. And when they fall, they want to sell.' Net inflows into the SPDR's ETF surged 170% year-over-year in the first quarter, pushing total investment demand to 552 tons, the highest level since early 2022, according to the latest World Gold Council report. Precious metals traders at top banks including JPMorgan Chase & Co. and Morgan Stanley posted their best performance in five years in the first quarter, in part thanks to an arbitrage opportunity that sparked a rush of bullion into the US. The trend is extending beyond the financial world. Leiva Joyas - one of Argentina's most established jewelers - has seen daily gold inquiries triple in 2025, reaching 300 a day. Sales have already doubled this year compared to 2024. 'People want to preserve their capital amid economic uncertainty. They know time deposits offer low returns,' said Daiana Azcona, a sales executive at Leiva Joyas. While companies remain barred from investing in physical gold, individual investors - many from the agriculture and finance sectors - are entering the market with a long-term perspective. Gold was once shunned by traditional investors, Echegoyen said. 'Now, even seasoned investors who had never considered it before are getting involved.' BLOOMBERG
Bloomberg
20-02-2025
- Business
- Bloomberg
Mortgages Triple as Milei Reignites a Snuffed-Out Housing Market
Endless boom-and-bust cycles have shuttered Argentines' access to mortgages for years. Now, home loans are coming back in a big way. Banks are expected to issue some $3 billion of them in 2025, up about 260% from the year before, according to local consultancy Empiria. Real estate brokerage franchiser Re/Max Holdings Inc. sees demand for housing soaring on the back of the reintroduction of loans.
