In Buenos Aires, the bustling Florida Street has become a hub for money changers, known locally as arbolitos, who are actively trading US dollars ahead of Argentina’s midterm elections on October 26. Many arbolitos express urgency in transactions, anticipating a devaluation of the Argentine peso post-election, as the government, led by President Javier Milei, grapples with triple-digit inflation and depleted reserves.
Milei’s administration has implemented a currency cap to address inflation, which many economists believe has resulted in the peso becoming overvalued. Luciano Galfione, a textile manufacturer, reports significant downturns in his business, laying off nearly 50 workers due to decreased consumption. Economic challenges continue as a substantial number of businesses have shuttered and jobs have been lost since December 2023. Analysts note that the currency freeze has made Argentina the most expensive country in South America while reducing tariffs has adversely affected local industries competing with cheaper imports.
Milei’s approach draws comparisons to populist leaders globally, including Donald Trump, with figures on both ends of the political spectrum monitoring the outcomes of these policies. A historical context is provided by Argentina’s cyclical economic crises, which have seen voters swing between different populist movements over the years.
Milei’s policy decisions and their potential consequences raise broader questions regarding the effectiveness of populist economics. While past populist leaders have faced challenges, they often maintain their grip on power despite adverse economic outcomes. Recent research indicates that populist regimes may experience long-term economic instability, yet they can remain in power longer than conventional administrations.
As uncertainty looms over Milei’s economic strategy, the Argentine population continues to confront the fallout from its policy choices, drawing international attention to the unfolding situation.
Source: https://www.theguardian.com/news/ng-interactive/2025/oct/26/do-populists-always-crash-the-economy