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Thanks to Javier Milei's controversial economic policies, the economy of Argentina seems to be recovering from the deep slump. The bold reforms of President Milei have received both praise and criticism. The GDP under Milei grew by 3.9% in the third quarter, July-September, representing a remarkable recovery. Agriculture and mining were two sectors that contributed a lot to the growth, supported by consumer spending. However, in contrast, some sectors like manufacturing and construction faced a major plunge, showing the uneven nature of the recovery.
Elected on a platform to battle chronic hyperinflation and put an end to Argentina's ailing economy, Milei implemented radical measures in his first year in office. He slashed government spending, thereby lowering inflation and stabilizing public finances. International figures such as US President-elect Donald Trump have praised these steps and have expressed interest in implementing some of Milei's fiscal policies. Investors have been optimistic about the country's future economic direction seeing a resurgence in Argentina's stock market as Merval stock index has gained 174% this year.
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Despite these gains, the cost of reforms have come at a cost, unemployment has increased and a rise in poverty as Milei's austerity measures eat into the poorest segments of society. The Argentine economy is still projected to shrink by 3.5% over the year, although next year is expected to offer brisk growth at 5%; a glimmer of hope.
To achieve long-term stability and welcome foreign investment, Milei must move to unwind capital controls and loosen the tightly managed exchange rate. Without addressing these issues, sustainable economic growth and improved living standards could remain elusive and thus, the public support for his emerging government will risk spreading thin. The "Chainsaw" reforms of Milei mark a considerable dent in Argentina's economic crisis; however, a true test lies in whether he can provide sustainable growth and prosper for all Argentines.
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