Argentina: Milei’s win brings shock therapy onto the table

Javier Milei’s victory in the final round of Argentina’s presidential election yesterday will bring about a major shift in economic policymaking. We suspect that some of his more radical proposals – namely dollarisation – may not materialise given limited support both in congress and among the public. His plans for drastic spending cuts and reduced government intervention are necessary ingredients for Argentina to exit its economic malaise. But given the extremely state of the fragile public finances and overvalued currency, another large fall in the peso and sovereign debt restructuring are likely.