Javier Milei arrived at the Casa Rosada in December 2023 with a chainsaw as a campaign symbol and a diagnosis condensed into his inauguration speech: “there is no money.” The promise was to cut public spending until the books balanced, privatize state-owned enterprises, and bring down inflation that had eroded wages for decades. Almost three years later, prices slowed, but one in three Argentinians lives below the poverty line, unemployment rose, and the economy contracted again.
The model entered the Brazilian election. In the Band debate on Sunday (the 18th), President Luiz Inácio Lula da Silva (PT) asked Senator Flávio Bolsonaro (PL) whether he intended to adopt the economic premises of the Argentine president, should he be elected president in the second round, which takes place next Sunday (the 25th).
In the debate, Flávio did not name the Argentine and replied that he would apply a “massive cut” to the public finances.
The proximity between Flávio and Milei, in terms of ideological alignment, is public. Flávio was in Buenos Aires in June to meet with Milei. Soon after, in July, the Argentine returned the gesture, going to São Paulo to participate in the PL convention that formalized the senator’s candidacy.
In his speech, the Argentine declared support for Flávio and criticized Lula and Alexandre de Moraes, the Minister of the Supreme Federal Court (STF). The Itamaraty recalled the Brazilian ambassador in the Argentine capital, Julio Bitelli, for consultations.
Economic Platform
Flávio Bolsonaro’s campaign coordinator, Daniella Marques, treated the neighbor as a reference, and did so on more than one occasion. “We will take inspiration from what was done by Javier Milei’s government in Argentina,” she stated, still in September, while citing the need to attract investments and reduce taxes.
On the same occasion, Marques stated that a potential Flávio government could revoke more than a thousand infralegal norms.
Milei came to power promising to lower the inflation that besieged the population’s purchasing power. At the end of 2023, the index was over 200% annually. More recently, prices rose 1.9% in September, after 1.7% in August, and have accumulated 33.4% in twelve months, according to the National Institute of Statistics and Censuses (INDEC).
With the decline, there was greater appreciation of the Argentine peso, which historically has always faced waves of devaluation against the US dollar. Additionally, the drop in interest rates and the cuts in public spending caused Argentine public finances to move into a rare historical surplus.
On the other hand, the social cost of the adjustment was felt immediately by the majority of the neighboring country’s population, especially the poorest sectors and the country’s own middle class.
In the first half of 2024, poverty reached 52.9%. Those were the heights of the fiscal adjustment, and the idea that it would be necessary to face a period of difficulties before prospering had already been anticipated by Milei in his first electoral campaign.
By the end of 2025, poverty fell to 28.2%. The percentage remained high, but significantly lower than the previous year. However, in 2026, poverty rose again, currently affecting a little over 32% of the urban population.
Meanwhile, extreme poverty advanced from 6.3% to 7.5%. In another form of measurement, one in 13 residents of Argentina’s large cities does not have enough income to buy the month’s basic food basket.
The ‘Labor’ Factor in the Economic Framework
The labor market has tracked the worsening of the complex Argentine economic situation. Currently, 45% of the employed work informally, lacking access to a signed work contract, vacations, or retirement contributions.
Unemployment fluctuated over the past years, but remains high. Milei inherited an unemployment rate of 5.7%, but the rate rose to about 7.7% in the first half of 2024, and declined over the year to 6.4% in the fourth quarter.
However, the relief did not hold through 2025, which ended the year at 7.5%. Throughout 2026, the rate remained stable, though high: 7.8% in the first half, with 7.9% currently. According to INDEC, the employment rate remains sustained by the fact that more people are looking for work, with an increase in informality.
Business Dynamics
Argentina, for decades, has faced problems related to trade openness. Industrial protectionism was one of the hallmarks of Juan Domingo Perón’s long tenure at the Casa Rosada, but it fell under Carlos Menem’s more liberalizing policies, who governed the country in the 1990s.
Since Milei took office, however, 30,633 companies have closed in the neighboring country. The amount represents around 6% of private employers in the country, according to the think tanks Fundar and the Argentine Center for Political Economy (CEPA).
Only in the manufacturing sector, 4,020 companies closed, generating just over 97,000 formal jobs up to May. Meanwhile, imports of household appliances more than doubled, while clothing imports rose 86% compared with the first half of 2023.
