Argentina
Spotlight Report by Dr. Emmanuel Igwe
It has been a marvel to witness the recent economic trajectory of Argentina since Javier Milei became its president. At the time of his election, inflation exceeded 200 percent, 40 percent of the population experienced poverty, and six out of ten children lacked access to good nutrition. This deterioration occurred despite policy reforms and reveals an essential truth about national prosperity: economic outcomes show the state of a country's fundamental institutions, policy framework and governmental structures. For Argentina, the decline in economic prosperity was a totality of economic policies designed to only fix short-term issues, while avoiding long-term impacts.
Previous attempts at economic reform have yielded adverse effects. The gradualist attempts in the Macri administration (2015 – 2019)—such as eliminating credit controls and settling disputes with international creditors—showed that incremental adjustments are inadequate when institutional rot runs deep. Despite these efforts, because fundamental institutions remained unchanged, the tax system (with 160 distinct taxes) did not incentivise productivity, leaving GDP to contract by 3.4 percent and inflation to increase to 50 percent.
This was followed by the re-adoption of Peronism by the Fernández administration (2019-2023). Price controls of various commodities created predictable shortages due to market signal suppression. In addition, government spending surged with the central bank continuously printing money to fund Treasury operations. At the end of Fernández's administration, Argentina was tethering toward hyperinflation with monthly inflation at 25.5 percent.
The Prosperity Index ranks Argentina tied in last place for inflation alongside countries like Sudan and Venezuela, and it ranks it 130th in the Economic Freedom pillar. This reflects the deep structural failures that have accumulated over many administrations, which the Milei administration has made concerted efforts to ameliorate. Whilst our Index does not yet include inflation data from the years of the Milei administration, it will in the next editions. If Argentina's trend towards disinflation continues, we expect this to contribute towards an improved Economic Freedom score in future editions of the Index.
This was the economic climate the Milei administration met in December 2023. To embark on his mission to fix the economy, the Milei administration commenced simultaneous measures to address exchange rate, fiscal, and monetary imbalance. Price controls were abolished, while the peso was devalued from 400 to 800 per dollar, curbing economic distortions. Through comprehensive spending reductions achieved by removing various subsidies and discretionary transfers, as well as suspending public work programmes, fiscal balance was achieved within the first month of the administration. Organisational restructure of the government led to a reduction in the number of ministries, secretariats, and undersecretariats.
The results show a drastic overturn of economic malaise in a short period of time. Inflation growth rate fell from 25.5 percent in December 2023 to 1.9 percent in August 2025. Annual inflation declined also from 200 percent in April 2024 to 36 percent by mid-2025. By the second quarter of 2025, GDP grew by 6.3 percent per annum, spurred by 32 percent growth in investment. As macroeconomic stability took hold, poverty rates began declining from 53 percent to 32 percent; levels not seen since 2018. This is evident in the country's ranking on aspects regarding citizens' wellbeing. It ranks 17th on Work, Hope and Purpose. Overall, Argentina is ranked 53rd out of 161 in the Prosperity Index, which reflects how a strong civil society and human capital base can boost resilience even when institutions are in a transitory state due to ongoing reforms.
With these reforms and the prospect for more to come, Argentina is growing in popularity amongst investors. Long suppressed institutions have been unlocked, boosting exports of major products such as beef, which exported 935,000 tonnes in 2024—the highest in a century. Mining exports increased by 44 percent in 2025 and energy trade recorded its highest surplus in 18 years at $5.7 billion. Globally, Argentina has strong civil liberties, ranking 29th on Freedom of Speech and 37th on Integrity of Society. These metrics provide an institutional foundation investors can trust, which surpasses macroeconomic metrics alone.
Deregulatory programmes such as breaking up the monopoly in the aviation sector and repealing rental market regulations which created artificial shortages, alongside initiatives to simplify the tax code facilitated needed economic dynamism. Reforms addressing recidivism, organised crime and border security led to a decline in homicide rates to 3.8 per 100,000 – meaning Argentina had the lowest homicide rate in South America. On Safety and Security, Argentina ranks 60th out of 161 countries, which is impressive as the country is currently undergoing fiscal austerity. These improvements in standards of living, and economic stability have created conditions for sustained prosperity.
When fundamental institutional gridlocks are addressed directly, prosperity divergence can be reversed as we observe in Argentina. When government structures remain compromised, surface-level improvements would be insufficient to turn the tide of economic malaise. On the other hand, when institutions are strengthened to function properly—market freedom, fiscal and monetary stability and limited government—prosperity indicators improve comprehensively. The lessons to learn from Argentina are: gradualist measures with weak government structures are inadequate to solve prosperity divergence, the quality of institutions matter profoundly, and despite their disruptive nature, comprehensive reform is a catalyst for sustained improvement across several prosperity dimensions. Being ranked 130th in Economic Freedom and 103rd on Property Rights indicates that there is still scope for significant institutional reform if new-found gains in macroeconomic stability is to be converted to long-term prosperity. It will be interesting to observe how Milei's reforms translate into Argentina's ranking on future Prosperity Indexes.
