Javier Miley began his libertarian economic experiment to transform Argentina. In a series of reports, The Telegraph's global economics editor Ambrose Evans-Pritchard travels to what was once one of the world's richest countries to test whether «shock therapy» can work.
The world's first and only libertarian The experiment in Austrian economics has baffled its critics in one respect. Five months after the worst financial shock ever seen in a modern advanced economy, President Javier Miley remains remarkably popular.
His poll ratings have remained little changed since his landslide victory in November last year, promising to take a chainsaw. to the deformed Argentine state and expel the eternal Peronist caste from public life. The general strike came and went. Nothing seems to harm him.
«Most analysts in December didn't think this government would last three months,» said Martin Castellano, head of Latin America at the Institute of International Finance.
Miley was betting everything on quelling inflation with a budget surplus. asking the nation to endure a short but brutal economic shock in exchange for sun-drenched higher ground.
“This was to be an extremely drastic adjustment. There was no alternative. In December, weekly wholesale price inflation was 17,000 percent and we fell into hyperinflation,” the president said.
“We had the worst legacy in Argentine history. When a country has a budget deficit of 4% of GDP, it is a yellow alert. When it's 8%, it's a red alert. Our figure was 17% if we take into account the central bank deficit,” he said.
He can claim victory. The monthly rate is expected to fall below 5% in May, much sooner than many expected. Posted prices are appearing in grocery stores again. Bread, rice, fruits and vegetables fall. The food and drink basket flirts with deflation.
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