The Argentinian economy may face considerable changes. Economists hope that they will be positive and that new President Javier Milei is competent enough to lead Argentina into a rosy future.
A few days after the new Argentine leader took office, the government announced the introduction of 10 new measures capable of lifting the economy out of crisis. However, for many investors, this is not enough.
The “shock therapy” package announced by Economy Minister Luis Caputo on December 19 included devaluing the peso to 800 per $1 from the current 336.5 per $1. However, the action may bring zero results as the value of the country's peso is not always what it seems as capital controls spawn an array of wildly diverging exchange rates.
The new president is ready to halve the number of ministries, cut transfers to provinces, and slash transport and energy subsidies. However, he is planning to support some social programs. The government is also targeting a slow weakening of the peso by about 2% per month as well as smaller government spending equivalent to 2.9% of gross domestic product.
Many investors have welcomed the current course of the Argentine authorities. They consider this a necessary condition for the development of the country's economy and are ready to invest in it, but they have some reservations. Analysts and investors want to get more detailed information about the government's plan as well as ways to achieve the goals. They are interested in how H. Milei will implement these initiatives, especially in the social sphere, and whether they will affect the standard of living in the country.
Although the overall sentiment is positive, most investors are wary of the measures taken by the Argentine authorities. They suppose that the government has not specified in which sectors financing will be slashed. In addition, the ministries’ statements did not indicate exactly how transfers to the provinces or subsidies for energy and transport would be reduced. In addition, the issue of social spending remains open. In other words, the plan should be worked out in order to avoid unrest in society.
Nevertheless, exports and traders are in a positive mood. They suppose that the implementation of the above-mentioned measures is just the first step of the new government. Later, the situation may need additional actions.