Milei projects Argentina inflation plunging to 18% by end-2025

President Javier Milei expects inflation to collapse next year while the economy recovers more than expected from a recession exacerbated by his historic austerity campaign. 

Milei’s administration estimates annual inflation, currently more than 236 percent, will slow to 104.4 percent by the end of this year and 18.3 percent by December 2025, according to his first budget proposal.

The President expects Argentina’s economy to grow five percent next year, above the 3.5 percent forecast by analysts surveyed by the Central Bank.

Before releasing the fine-print details to Congress on Sunday, Milei delivered a combative speech in the legislature laced with insults aimed at opposition lawmakers, in which he doubled down on the need for fiscal balance and austerity. The speech came after members of Congress failed on Wednesday to override Milei’s veto of a social security bill that he warned would have threatened Argentina’s fiscal balance. 

The budget projections detail Milei’s vision for the economy as his minority party heads toward midterm elections next year, needing more seats in Congress to advance with his agenda. Milei has maintained relatively high approval ratings around 50 percent despite slashing spending and devaluing the currency. Analysts widely say he’ll need to show voters an economic recovery next year to keep public opinion on his side. 

Key to his battle against inflation, Milei’s budget projects the official exchange rate to end 2025 at 1,207 pesos per dollar, indicating a depreciation of the peso similar to the current pace of two-percent a month that the government controls. Investors are keenly waiting for Milei to outline a timeline and path out of Argentina’s labyrinth of currency controls as a key step before the country returns to international capital markets in early 2026. 

The budget also carves a path for Milei’s economic team to negotiate a new agreement with the International Monetary Fund to replace the country’s current US$44-billion deal.