HomeBussinessMilei is already proving the Left-wing economic establishment wrong

Milei is already proving the Left-wing economic establishment wrong

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Last week, Milei announced that the country had recorded its first quarterly budget surplus since 2008, a modest 0.2pc of GDP, but still an astonishing achievement in such a short space of time, especially for a country that has run deficits for 113 of the last 123 years. 

Then, earlier this week, the central bank, which Milei has not yet gotten around to abolishing as he pledged, cut interest rates for the third time in three weeks. While they are still at an eye-watering 50pc, that will start to feed through into the economy very soon. Investors have started to notice. 

According to Bloomberg data, in the blue-chip swap market the peso was the best-performing currency in the world in the first quarter of this year, and the bond markets are rallying as well. 

It may also get better over the months ahead. With stabilising prices, and a rising currency, investment should start flowing again into a country rich in natural resources and hyper-competitive on wages costs. 

If Milei can make good on his promise to unlock the country’s vast reserves of shale oil and gas – using technologies that have proved safe and successful in the US – then the economy could even start to boom.

If so, Argentina would be defying a global economic establishment addicted to bigger government, more regulation, and rising deficits. 

We keep being lectured, not least by the shadow chancellor Rachel Reeves, and by President Biden and his acolytes in the United States, on the need for an active state, an industrial strategy, and more borrowing to pay for investment, and that regulation is the key to industrial and economic leadership, not its enemy. 

The IMF, meanwhile, was too often a huge cheerleader for the failed Argentinian administrations of the past, extending the biggest loans in its history to the country. 

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