Argentina’s poverty rate has dropped to 38% in the second half of 2024, down from 53% in the first half, marking the lowest level since 2022.
This sharp decline, announced by the national statistics agency, underscores the impact of President Javier Milei’s aggressive economic reforms, which have simultaneously tackled runaway inflation.
While the libertarian leader’s policies signal a turning point for the nation, millions still grapple with economic hardship, and significant challenges loom ahead.
Poverty Rate Falls Amid Economic Overhaul
The dramatic drop in poverty from 53% to 38% offers a lifeline to millions of Argentines. In early 2024, triple-digit inflation had pushed most citizens below the threshold for affording basic goods.
By late 2024, however, only 11.3 million people remained in poverty, though this figure includes a staggering 52% of children under 14. This progress follows Milei’s “shock therapy” strategy, introduced after he took office in December 2023, which aimed to reverse years of economic mismanagement under the prior left-leaning government.
Milei’s “Shock Therapy” Tames Inflation
Milei’s reforms were swift and decisive: a steep devaluation of the peso, deep cuts to public spending, and the scrapping of price caps. These measures initially unleashed pent-up price pressures, driving annual inflation to a peak of 289% in April 2024.
Yet, the gamble paid off. By February 2025, inflation had fallen to 66%, and the economy emerged from recession in Q3 2024. The International Monetary Fund (IMF) now forecasts a robust 5% growth rate for 2025, signaling a stabilization that few anticipated.
The government hailed the poverty data as proof of past policy failures, stating, “The previous administration sunk millions into poverty while claiming to help them.” They argue that Milei’s focus on economic freedom and fiscal discipline is the sustainable path forward.
The Cost of Stability: Who Pays the Price?
Despite these gains, Milei’s critics highlight the human toll of his austerity measures. A significant portion of last year’s fiscal savings came from slashing pensions and social programs, disproportionately impacting the lower class.
Pensions and private sector incomes have recently rebounded to late 2023 levels, the recovery has been uneven. For many of the 11.3 million still below the poverty line, economic stability remains out of reach.
Challenges Ahead: IMF Deal and Peso Pressures
Milei’s next test lies in securing Argentina’s economic future. A critical $20 billion IMF deal, expected in April, aims to replenish the country’s depleted foreign exchange reserves, essential for stabilizing the peso and meeting debt obligations.
However, uncertainty over the deal’s terms has already rattled markets, with the peso’s parallel exchange rate dropping 8% recently. As Milei begins to ease strict currency controls, experts warn of potential volatility.
Marcelo J. García, America’s director at Horizon Engage, noted, “The poverty line in Argentina is highly sensitive to inflation. The big question is how Milei’s program will keep prices in check with mounting pressure on the peso.” Sustaining the poverty decline hinges on navigating these risks.
