Is Argentina’s economy entering a new era?

Argentina’s economy appears to be undergoing a significant transformation under President Javier Milei. His administration has implemented a series of fiscal and monetary reforms aimed at stabilizing public finances and restoring investor confidence. And it seems to be working, opines Wells Fargo in a recent market analysis.

Key measures include deep cuts to government spending, ending central bank general government financing, and maintaining a strict cap on the broad monetary base. These actions have helped Argentina achieve its first fiscal surplus in decades and sharply reduce inflation from its 2024 peak.

“We haven’t said this too often, but the recent policy mix in Argentina has been remarkable. Remarkable in the sense that Argentina’s economy is on the path to being transformed from perpetually challenged to one of potential prosperity,” says Brendan McKenna, international economist for Wells Fargo’s Corporate and Investment Bank.

However, despite the optimism, McKenna cautions that Argentina’s economic turnaround and the reform agenda could also be short-lived.

Read the full assessment here.