(Bloomberg) – Argentina’s president, Javier Milei, downplayed concerns about the country’s stagnating economy, highlighting the steady year-over-year growth that left him “very confident” about his chances of winning another term next year.
“We see no problem with growth,” Milei said on Thursday in an interview with Bloomberg News editor-in-chief John Micklethwait at the Economic Club of New York. “This year, we will grow around 3%, perhaps a little less, and the outlook for next year is for roughly similar growth.”
Since taking office three years ago, Milei has managed to reduce double-digit inflation. However, the economy contracted 0.6% in the second quarter, the first quarterly decline in two years.
Economists surveyed by the central bank also cut their growth forecast to 2.1% in August, down from a 3.5% estimate in December. Data released later on Thursday showed that economic activity contracted 2.9% in July from the previous month, a result far worse than expected. Activity also fell 1.4% year over year, while poverty rose in the first half of the year.
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The slowdown has led analysts to debate whether Argentina faces the risk of a technical recession this year, while also fueling investors’ concerns that the pro-market leader will face a tough re-election battle. Surveys showing voters are now more worried about unemployment than inflation have intensified the challenge.
In August, Milei’s approval rating stood at 38%, near the lower end of his presidency, according to a survey by AtlasIntel for Bloomberg News. About 70% of Argentines described the job market as poor, the survey found. Milei dismissed the surveys, saying they are not reliable in Argentina.
Argentina has lost nearly 250,000 private-sector jobs since just before Milei took office, and unemployment rose to nearly 8%.
What Bloomberg Economics Says
“The very weak numbers for economic activity in July brought the Argentine economy to a level almost identical to what it was when Javier Milei took office and are likely to contribute to market pessimism. Investors are likely to fear that weak activity and unfavorable labor market conditions could jeopardize the president’s chances of reelection next year.”
—Jimena Zúñiga, Argentine economist
But Milei attributed the slower growth to weighted indexes that fail to account for what he called Argentina’s structural transformation, particularly its expanding oil and gas sector. He also argued that the economy has created 520,000 jobs, but many of them are overlooked because they are informal.
“What’s happening is that these jobs are being created in the informal sector,” he said.
Analysts point to Milei’s attempt to curb inflation as the main culprit behind the slow growth. The Argentine peso has depreciated 3.7% against the dollar this year through August, while consumer prices have risen 21%. This real depreciation has been driven in recent weeks by government intervention in the bond and futures markets, though monetary policy remains restrictive.
Not as libertarian as I would like
Milei argued that the growth of informal work is largely due to private-sector fears of a return to interventionist policies by his opponents in next year’s elections. He specifically cited Buenos Aires Governor Axel Kicillof, considered Milei’s most likely opponent and a traditional ally of former leftist President Cristina Kirchner.
The opposition is also behind persistent capital controls in Argentina, Milei said. Although he has loosened the exchange-rate policy, Argentina still uses an administered exchange regime — known as a “dirty float” — and maintains some restrictions on the dividends that companies can repatriate.
“We have to take precautions,” Milei said. “I am not as anarchist as I would like, nor as libertarian as I would like. But I have the responsibility to govern 48 million people, knowing that on the other side there are people willing to destroy everything. I am crazy, but I will not eat glass.”
Read also: Poverty index tests Milei in Argentina ahead of elections
Before the 2027 general elections, Argentina will also hold a nationwide primary election, known as PASO, which typically provides an initial gauge of voters’ preferences. Milei sent to Congress a bill to abolish PASO earlier this year, in an attempt to avoid earlier market volatility.
“Politics isn’t my thing,” Milei said when questioned about the reason for the bill’s pause.
In previous electoral cycles, the vote led to a deterioration of central bank reserves as Argentines bought dollars to shield their economies amid electoral uncertainty.
But Milei said the move to eliminate PASO aims to rid the process of what he described as a tool of “dirty politics,” rather than political calculations.
U.S. Trade Agreement
Argentina continues working on new U.S. tariff exemptions, Milei said, alluding to the fact that the country has yet to ratify the trade agreement signed with the Trump administration in February.
The government pressed to renegotiate some terms of the agreement after the U.S. Supreme Court’s ruling on Trump’s global tariffs, Bloomberg News reported on Tuesday.
Although Trump has called Milei his “favorite president,” his political aides have traveled to Buenos Aires in recent weeks to convey a clear message: renegotiation is off the table.
Milei also reiterated Argentina’s claims over the Malvinas, a British-controlled overseas territory that lies at the center of a long-running territorial dispute.
“We are the owners of the islands by geography, by law, and by history,” he said about the Malvinas, as they are known in Argentina.
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