Most years have a dividing-line which is rarely the exact midpoint with the year ending on Tuesday one example – very broadly there is a before and after of the April 23 march drawing up to a million people, which, beyond its specific purpose of defending university spending, served as a catharsis to protest all the austerity, recession and runaway inflation preceding it. April was also the month in which the new index-linked updating of pensions kicked in so that millions of the retired taking two or more steps back until then began to take one step forward. Monthly inflation only entered single digits in the second quarter and took its time falling below four percent during the winter while country risk did not plunge until spring but things were already starting to click.
The first third of the year was absorbed by an over-ambitious 664-clause omnibus bill, forcing a President Javier Milei spending much time abroad to adjust his pace to that of Congress (his 10-point Pacto de Mayo had to wait until July) – condensed to a minivan of 232 clauses, the omnibus finally cleared the Chamber of Deputies in late April and the Senate in early June but only with the deciding vote of Vice-President Victoria Villarruel (increasingly estranged throughout the year). The controversial and instantly questioned Supreme Court nomination of federal judge Ariel Lijo came in mid-March, raising doubts about Milei being institutionally as well as politically incorrect (confirmed towards the end of the year by his reluctance to expel a dollar-laden Senator Edgardo Kueider or approve the ficha limpia bill to exclude corruption convictions from electoral candidacies) – the presidential vetoes started in June while there never seemed any serious intention of seeking Congress approval for the 2025 Budget. Macro-economic and fiscal stability contrasted with the volatility of a high turnover in government ranks (with Cabinet Chief Nicolás Posse and Foreign Minister Diana Mondino among leading casualties) but the political fragmentation of the opposition – with the Peronists, PRO and the Radicals (who formally split in Congress) all divided –played into Milei’s hands while his predecessor Alberto Fernández was in the doghouse over gender violence and insurance fraud with the pickets and social organisations all but vanishing despite persistent mass poverty.
As from Donald Trump’s triumph in early November, everything seemed to be going Milei’s way as 2024 reached its end.
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Even if almost 90 hours of 2024 still remain for early readers, this newspaper’s tradition is to preview the year ahead in its last edition of the outgoing. The year rounding out this millennium’s first quarter-century looks as “condemned to success” as the 2021 following the pandemic lockdown year with its virtually double-digit shrinkage and for broadly similar reasons as a logical rebound from two negative years – the questions are whether growth will see a deeper transformation than 2021 and whether this year’s midterms will bring the government more joy than then. And which of these two things will take greater priority for the Javier Milei presidency – the transformation or the midterms?
The virtual guarantee of growth will free this year from most of the problems arising out of the 2024 recession compounded by austerity but new challenges lie ahead for both the public and private sectors. An annual inflation of 20-30 percent will make the fiscal surplus a longer shot than in the outgoing year when the higher monthly rates boosted nominal revenues while shrinking costs. The private sector will need to become more competitive without the knee-jerk reaction of jacking up prices in the confidence that the money will be printed – stiffer competition will also be faced from the imports to which the government is already opening up the economy to keep inflation on a downward path when this year’s recession has left so many small shops and businesses on the brink. Labour, tax and other structural reforms are urgently needed to leave no excuse for becoming competitive but will the midterms delay such transformation? In this context an agreement with the International Monetary Fund (IMF) permitting an exit from cepo currency and capital controls becomes vital to broaden economic growth beyond the most dynamic sectors.
The Milei presidency begins this year riding the crest of a wave but neither the rest of the world nor the existence of black swans can be ignored and nor is the economy the only issue (the future of the Supreme Court, for example). But within these caveats and all things being equal, the best electoral strategy remains staying on course.
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