- The poverty rate has dropped from 55% to 38.9%.
- Poverty declines as real wages recover sharply.
- Job creation in recent quarters has also contributed.
Javier Milei’s economic plan has achieved results surprisingly quickly: multiple fiscal surpluses, powerful disinflation (monthly inflation dropped from 25% to 2.4% within a few months), a dramatic reduction in country risk, the opening of dollar markets for some companies, a stable energy trade surplus, and an increase in gross dollar reserves. These developments have become hallmarks of what many are calling the Milei economic miracle. However, this plan initially had a significant weakness. In the first months of Milei’s government, the poverty rate rose above 50%, an alarmingly high figure that overshadowed nearly every financial and economic achievement.
Nevertheless, according to preliminary data, indicators, and studies conducted by various institutions, poverty in Argentina has plummeted in the second half of 2024. Although this was expected due to the notable increase in real wages (discounting inflation) and the drop in unemployment in recent quarters, the decline in poverty has been remarkable, falling from nearly 55% in the first quarter to below 40% by the third quarter of 2024. This achievement is a testament to the Milei economic miracle, which has defied early critics and surpassed expectations.
The return of economic growth, increased investment, and rising real wages are rapidly reducing the poverty rate in Argentina. This improvement stems partly from the same policies that initially led to elevated levels of poverty: drastic public spending cuts, restructuring of the central bank’s balance sheet, deregulation of specific sectors, and liberalization of prices in the economy. These measures came at a short-term cost to Argentina’s economy, including higher unemployment, suppressed real wages, and an elevated poverty rate.
However, the recovery of these indicators began in the second half of the year, leading to a decline in poverty. While official poverty data will not be published by Indec (Argentina’s national statistics institute) until well into 2025, studies conducted by the Torcuato Di Tella University have already revealed a month-by-month decline in poverty rates. The most significant change, however, came with the latest report published by the Ministry of Human Capital through the National Council for the Coordination of Social Policies (CNCPS). Using official Indec data, the report projects that poverty fell to 38.9% in the third quarter of 2024, a 15-point drop compared to the first quarter. These results further reinforce the Milei economic miracle and its ability to foster swift economic recovery.
Why Poverty Is Declining
Thanks to implementing economic policies that have reduced inflation and stabilized the economy, poverty has declined significantly in the second half of the year (although the decline began in the second quarter). The poverty rate dropped from 54.8% in the first quarter to 51% in the second quarter, with a mid-year result of 52.9% and a projected sharp fall to 38.9% for the third quarter. The CNCPS emphasizes that it used the same data and parameters as Indec, which are publicly available. The only difference is that the statistics institute releases poverty data only twice a year, although the available data could allow for quarterly reporting, as demonstrated by CNCPS.
The key to this reduction in poverty lies in economic recovery, real wage growth (wages are rising faster than inflation due to its moderation), and falling unemployment, which has accompanied the economic rebound. The Milei economic miracle has also bolstered investment confidence, driving growth across key sectors. Argentina’s economy has exceeded all growth expectations for the year’s third quarter. GDP expanded by 3.9% compared to the previous quarter, equivalent to an annualized growth rate of nearly 17% (using this projection model favored by Americans). Market consensus had anticipated a 3% quarterly growth and a 2.6% year-over-year decline.
Increased Investment and Employment
More importantly, an analysis of GDP data reveals a surge in private investment—a key driver of future economic growth and employment. Investment has soared thanks to deregulation and increased economic certainty by several government-approved laws. As a result, the unemployment rate has fallen from 7.7% in the first quarter of the year to 6.9% in the third quarter, the latest official figure.
A prime example of this investment boom is Argentina’s mining sector, which grew by 7.3% quarterly, making it the second-fastest-growing sector after agriculture (aided by a strong harvest this year). The mining sector includes oil, with substantial investments in Vaca Muerta, a shale oil field now producing over 430,000 barrels of unconventional crude oil daily. Vaca Muerta promises to secure consistent current account surpluses for Argentina, bringing in more dollars to stabilize the peso’s exchange rate. Additionally, investments in Vaca Muerta contribute to gross fixed capital formation (GFCF), boosting present production and improving future expectations.
Daniel Fernández, an economics professor at Universidad Francisco Marroquín, explained in a recent analysis that “the economy continues to shine, leading to rising wages and employment growth. Milei’s government has achieved the ‘miracle’ of stabilizing the country’s macroeconomy without destroying its economy (now growing annually) and relying on foreign investment. Attracting foreign investment should be one of the government’s next goals,” he added.
International Endorsements
In early December, the OECD acknowledged Argentina’s positive and hopeful economic signs regarding growth, reforms, and inflation. The international organization praised Argentina for achieving a primary fiscal surplus between January and October this year—something “not seen since 2010.” These developments underscore the Milei economic miracle, which has already reshaped Argentina’s fiscal landscape.