Perónism¹ has ruled Argentina for over half the time since Juan Perón’s first presidency in the 1940s. To this day, Perónists are politically powerful, particularly in the trade unions and political classes. The Justicialist Party (“PJ”) has been the largest political party in Congress almost consistently since 1987 and is the largest branch within Perónism. Alberto Fernández, who was President of Argentina until December 10, 2023, has been a member of the Justicialist Party for most of his political life. Other PJ members include Carlos Menem, Néstor Kirchner and Cristina Fernández de Kirchner.

Javier Milei, a self-described anarcho-capitalist, was recently elected President of Argentina and was sworn into office on December 10, 2023. Milei won Argentina’s presidential election with nearly 56 percent of the vote, defeating the country’s economy minister, Sergio Massa (a former member of the Justicialist Party). Milei is pledging economic shock therapy in an effort to resolve Argentina’s chronic economic malaise.² His plans include shutting the central bank, abandoning the peso (dollarization of the economy),³ slashing spending, deregulation and privatization. He has also promised to cut the number of federal ministries from 18 to eight and to dismiss public officials hired in this calendar year. FT reports that on December 20, Milei unveiled a sweeping emergency decree⁴ that mandated more than 300 measures to deregulate the country’s economy. According to El País, during the week of December 11, “prices in supermarkets [rose] by up to 40 percent after the end of the freeze on costs for basic groceries promoted by Peronism, while the price of fuels [increased] by at least 30 percent.”

According to The Washington Post, Milei studied economics at the University of Belgrano in Buenos Aires. As stated in the Buenos Aires Times, he “also has postgraduate work in economic theory at the Instituto de Desarrollo Económico y Social and a postgraduate degree in economics at the Universidad Torcuato DiTella.” The Post reports further that Milei has taught economics and written several books, including “The Path of the Libertarian” and “The End of Inflation”; that he worked as a risk analyst for Corporacion America; and that was a television pundit.

In his victory speech, Milei is quoted as stating: “[e]nough of the impoverishing model of the [political] caste, today we return to embrace the model of freedom to be a world power.” According to the Buenos Aires Times, Milei considers the “caste” to be those who implement policies “harming people…  to protect” their own privileges while arguing that they can do no other. The caste, according to Milei, “are the corrupt politicians, the businessmen living off state contracts and bribed journalists.”

A Macroeconomic Snapshot of Argentina

Argentina has a Gross Domestic Product (GDP) of approximately US$650 billion, according to The World Bank, which also reports that “[a]ccording to national statistics published in September 2023, poverty stands at 40.1 percent and extreme poverty stands at 9.1 percent.” Trading Economics (citing data from Instituto Nacional de Estadística y Censos (INDEC)) reports that in Q2-2023, the unemployment rate in Argentina was at 5.7 percent, the employment rate was 45.5 percent, and the labor force participation rate was 48.2 percent. In November, DW reported that the annual inflation rate in Argentina hit 143 percent. Consumer price inflation averaged 38.8 percent in the ten years to 2022 in Argentina, compared to the Latin America regional average of 8.4 percent. The soaring inflation rate has prompted the central bank to raise interest rates to as high as 133 percent. Argentina has defaulted on its international sovereign debt nine times, including three times during the past two decades. Almost one-third of the current total IMF lending is to Argentina, which is $44 billion in debt to the IMF, according to Vox.

The Buenos Aires Real Estate Market

According to JLL, the Q-3 2023 vacancy rate for the corporate office market of Buenos Aires was 13.4 percent. At 11,000 square meters (sm), net absorption during Q3-2023 outperformed the same period last year (4,900sm), according to the report, which states that the general asking price during Q3-2023 was US$23.10/sm/month—slightly below the preceding quarter (US$23.30/sm/month).

In Q1-2023, the average price of apartments in Buenos Aires fell by 5.41 percent year-over-year to US$1,731/sm, following annual declines of 6.03 percent in Q4-2022, 7.11 percent in Q3-2022, 6.31 percent in Q2-2022 and 7.01 percent in Q1-2022, according to Global Property Guide (citing data published by Reporte Inmobiliario). When adjusted for inflation, prices fell by 53.71 percent year-over-year in Q1-2023, according to the report.

According to Cushman & Wakefield, in H1-2022, the Buenos Aires logistics/industrial real estate market had a vacancy rate of 9.4 percent, net absorption of 150,134sm, and an average asking rent rate of US$5.40/sm/month. Mass consumption companies (mostly supermarkets) dominated the demand for industrial space, according to the report, which also states that construction projects reached 61,000sm—a level deemed insufficient to meet the 160,134sm demanded in the first six months of 2022.

The main retail corridors of the City of Buenos Aires total 1,372 stores, averaging 228 commercial spaces per corridor, according to JLL, which reports the average vacancy rate of all the retail corridors included in its survey to be 2.6 percent (as of the end of 2022)—significantly below the year-end 2019 average (6.3 percent). The retail corridors of “Santa Fe & Pueyrredón” and “Rivadavia & Acoyte” recorded full retail occupancy throughout 2022, while the Calle Florida pedestrian shopping street—a retail corridor that is dependent on office workers and tourists and that was most affected by the pandemic—had the highest vacancy and turnover rates of the retail corridors surveyed by JLL. During the last quarter of 2022, the average asking price for retail space in Buenos Aires was US$17.00/sm/month—22 percent below 2018, when they averaged US$22.00/sm/month, according to JLL. The report notes that the highest-priced corridors in 2022 were “Rivadavia & Acoyte” (US$68.90/sm/month), “Santa & Pueyerredón” (US$39.70/sm/month) and “Puerto Madero Oeste” (US$25.00/sm/month).

Many real estate transactions in Argentina are agreed in U.S. Dollars.

Looking Ahead

As Milei transitions from campaign to Casa Rosada, the following factors are likely to affect and determine his government’s level of success in helping Argentina turn the page:

1.) Political and ideological authenticity. Milei should clarify the nature of his government and commit to an ideological stance. Either Milei is a libertarian (and/or an Austrian), or he is a right-wing populist. He cannot be both, because the two are incompatible and fundamentally at odds. The burden is on Milei to show that his movement (and now his government) is different from the right-wing populist trends seen recently in other major countries of the Americas. It is acknowledged⁵ that Milei will need to make compromises and form alliances in order to advance his agenda. However, there is a difference between being politically flexible and astute and being ideologically feeble and recreant.

2.) Incrementalism and maturity in governance. Milei should pursue policies and methods that achieve sustainable change and growth. Reforming Argentina is a long-term process and requires a cultural shift. After identifying and committing to an ideological stance, Milei’s administration should ensure that its policies are implemented in a non-ideological, grounded, gradual and compassionate manner that aims to win the hearts and minds of Argentinians from across the political spectrum. Deregulation should be coupled with enhancements in government transparency and accountability. Privatization should go in tandem with new, vigorous measures to combat corruption. Dollarization (or the adoption of a currency peg or currency board) should occur simultaneously with efforts to preserve and improve Argentina’s social safety net.⁶ Furthermore, Milei’s government should take a pragmatic and sophisticated approach toward foreign policy and eschew ideologically motivated statements that oversimplify and potentially compromise Argentina’s important and complex role in the region and the world. Finally, Milei should heed the wise words of James Madison that “the advancement [and] diffusion of knowledge,” … “is the only guardian of true liberty” and ensure that under his leadership, education is a top priority.

3.) Protection of fundamental rights. In part because of Argentina’s dark past, the Milei administration should spare no effort to ensure that the fundamental rights of Argentinians are protected without exception. Particularly during periods of major reform, the freedom to exercise fundamental rights becomes sacrosanct. The rights of speech and peaceful assembly should not be constrained under the guise of public safety and order.

1. Collins dictionary defines Perónism as “the principles or policies of Juan Perón.” Perón served as President of Argentina from 1946 to 1955, and again from October 1973 to his death in July 1974. Perónism is also known as Justicialism. In a speech made on October 17, 1950 at the Plaza de Mayo, Perón listed the twenty truths of Perónist Justicialism which Perón stated formed the core of his Justicialist political movement. ↩︎
2. In 1913, Argentina was ranked among the world’s ten wealthiest countries, with a GDP per capita on par with France and Germany. Beginning in the 1930s, Argentina’s economy deteriorated notably. ↩︎
3. According to Vox, Milei’s team estimates that dollarization could cost around $40 billion. ↩︎
4. FT states further that “[u]nder Argentina’s constitution, presidents can issue ‘decrees of urgency and necessity’ on most areas of policy — except tax, penal and electoral matters and rules for political parties — when ‘exceptional circumstances make it impossible to follow ordinary procedures.’ Decrees stay in place until both houses of congress vote to strike them down.” ↩︎
5. In Congress, Milei’s La Libertad Avanza coalition holds 15 percent of seats in the lower house and less than 10 percent of the senate, according to FT. ↩︎
6. To the extent that Milei is a Hayekian, it should be noted that Hayek was not opposed to the concept of a social safety net (see, e.g., Bernard Levin in conversation with Friedrich Hayek (“What we can but can only in a wealthy society is to assure for all a certain minimum below which nobody need to fall.”); see also, Law, Legislation and Liberty, volume 3, chapter 3, p. 55 (1979) (“The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be a wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.” … “It is unfortunate that the endeavor to secure a uniform minimum for all who cannot provide for themselves has become connected with the wholly different aims of securing a ‘just’ distribution of incomes.”)). Hayek’s views regarding the nature and breadth of a social safety net and/or a universal basic income are subject to debate. ↩︎

Last Updated on December 26, 2023 by Ramin Seddiq