Argentina’s economic chaos after shock primary win

Aug 16, 2023, 6:15am EDT
 Argentine presidential candidate Javier Milei of La Libertad Avanza alliance arrives to vote during Argentina's primary elections, in Buenos Aires, Argentina August 13, 2023. REUTERS/Mariana Nedelcu/File Photo
REUTERS/Mariana Nedelcu/File Photo
South America
Jenna Moon/

Argentina’s economy is spiraling further into chaos after the shock presidential primary win of Javier Milei, a radical far-right politician. Milei has promised to dismantle the country’s central bank among a raft of unorthodox economic policies, and his win has been described as a “political earthquake.”

Inflation skyrocketed shortly after Milei's win on Sunday. The price of consumer goods jumped by double-digits overnight, and hikes of up to 20% were reported on items like laptops. The government is facing pressure to devalue the peso — and economists believe that the country could be facing a hyperinflation spiral, with the annual inflation rate expected to reach 180% by October.1

The economic situation was so dire that the country briefly banned beef exports, before walking back the policy hours later. Argentina is one of the largest beef exporters in the world, and it is a staple food for millions of households domestically. Agriculture Secretary Juan Jose Bahillo said he was in talks to control prices on beef, but some are skeptical that red meat prices would fall soon. Miguel Schiariti, head of Argentine beef industry group Ciccra, told Bloomberg that the "agreements with the export sector are only about 6% to 7% of all the meat consumed in Argentina."2

The drop in value of the peso could mean further issues ahead for Argentines. Speaking to Reuters, Sergi Lanau of Oxford Economics pointed out that among Milei's policies is a plan to dollarize Argentina's economy. "If you are an Argentine and have pesos now you start wondering if the peso will further depreciate to 800 to a dollar or 1,000 pesos to a dollar," he said. Argentina's black market exchange rate has doubled3 , and that might hit the average person harder: "There is no clue on what is going to happen so that means people will be willing to pay even more pesos in the parallel market to get dollars," Lanau said.4