Argentina’s Milei Faces Growing Economic and Political Strain as Unemployment Rises

Argentina’s economy showed a slight expansion in January, but it follows a quarter of weaker-than-expected growth under President Javier Milei. The improvement appears fragile and may not be enough to protect the fiscal surplus and reform momentum Milei has championed. Political and social pressure is rising. Milei’s approval rating fell to a new low since taking office as unemployment increased, corruption allegations surfaced, and Argentines became more skeptical of his trade deal with the Trump administration. The next phase will depend on whether spending cuts can be sustained without further weakening growth and whether political legitimacy can stabilize enough to keep reforms on track.

Geopolitical Implications

• 01

  Domestic political risk in Argentina can affect the credibility and continuity of external commitments, including US-linked trade arrangements.

• 02

  If fiscal targets weaken, Argentina’s negotiating leverage with external partners may decline, complicating US-Argentina economic cooperation.

Key Signals

• —Durability of the fiscal surplus (execution of spending cuts vs. revenue performance).
• —Unemployment trajectory as an early indicator of social and political backlash.
• —Development and impact of corruption allegations on government stability.
• —Progress and public acceptance of the US-linked trade deal.