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Argentina Sees Significant Drop in Poverty Amid Economic Overhaul
Buenos Aires, Argentina – Official data reveals a notable decrease in Argentina’s poverty rate during the latter half of 2024. This development is being seen as a significant achievement for President Javier Milei as his administration implements sweeping economic reforms aimed at stabilizing the nation’s economy.
Sharp Decline in Poverty Rates
The National Institute of Statistics and Census (INDEC), Argentina’s official statistics agency, reported that the poverty rate experienced a substantial reduction, falling to 38.1 percent between July and December 2024. This represents a nearly 15 percentage point decrease compared to the first six months of the year.
Household poverty also saw a significant contraction, dropping by 13.9 percentage points to 28.6 percent. Furthermore, extreme poverty was more than halved, receding from 18.1 percent to 8.2 percent, according to INDEC data.
Turnaround Under Milei’s Administration
This marks a considerable shift from the outset of President Milei’s term. Upon assuming office in December 2023, Milei inherited a poverty rate of 41.7 percent. This figure then surged to 53 percent as his government initiated a “shock therapy” program designed to address Argentina’s prolonged economic distress.
Inflation Reduction: A Key Factor
A primary catalyst for this poverty reduction is the marked deceleration of inflation. Annual inflation, which had soared to 276.2 percent annually – among the highest globally – has receded to 66.9 percent in the past month. Monthly inflation has also diminished, decreasing from 25.5 percent in December to just 2.4 percent in March.
Government Statement on Economic Policy
“These figures demonstrate the failings of previous policies, which pushed millions of Argentines into precarious situations while espousing to aid the impoverished, even as poverty continued its ascent,” President Milei’s office stated following the INDEC report release. “The current administration has demonstrated that the path of economic freedom and fiscal prudence is the route to long-term poverty alleviation.”
Impact of Free Market Reforms
These remarks suggest that Milei’s focus on free market reforms is beginning to yield positive outcomes.
Inherited Economic Challenges
It is important to recall the difficult economic landscape Milei inherited. According to economic analysts, he took over a nation grappling with over 200% inflation in 2023, a poverty rate of 40%, a substantial fiscal deficit, mounting public debt, a central bank facing bankruptcy, and a contracting economy.
Milei’s Reform Measures
In response to this crisis, Milei pledged a radical transformation of Argentina’s economic model. His administration implemented significant cuts to government spending, removed price controls, devalued the peso, reduced subsidies, halted public works projects, and implemented public sector layoffs. While these measures faced opposition, they were deemed essential. The latest economic data indicates the impact of these policies.
Signs of Economic Recovery
The Argentine economy is showing signs of renewed growth, with Gross Domestic Product (GDP) increasing in the last two quarters. The disparity between the unofficial and official exchange rates for the dollar has narrowed. Rental costs have decreased, and the availability of housing has improved following the repeal of rent control legislation. Furthermore, investor confidence in Argentina is showing resurgence, and discussions are underway between the International Monetary Fund (IMF) and Milei’s government regarding a new financial program. The IMF projects a 5 percent growth rate for Argentina in 2025.
Remaining Challenges
Despite these positive trends, significant challenges persist. Over 11 million Argentines still live in poverty, with 2.5 million experiencing extreme poverty. A concerning statistic is that over half of all children aged 14 and under in Argentina are classified as poor.
President Milei has consistently stated that his adjustment plan would initially have a “negative impact on activity levels, employment, real wages, and poverty rates” before improvements were seen. The situation now appears to be improving, potentially at a crucial time politically.
Midterm Elections on the Horizon
With midterm elections approaching in October, Milei’s party, La Libertad Avanza, has an opportunity to expand its political influence. Currently, the party holds a limited number of seats in Congress. However, with a significant portion of both the lower house and the Senate up for election, the improving economic climate could bolster support for Milei, providing him with the necessary backing to further his reforms.