Poverty in Argentina falls to lowest level since 2018

Poverty in Argentina fell sharply to its lowest level since 2018 as President Javier Milei’s policies brought down inflation from triple-digit territory, an accomplishment that could help his party regain some momentum with voters before October midterm elections.

In the first half of the year, 31.6 percent of Argentines lived in poverty, down from nearly 53 percent in the early months of Milei’s Presidency a year ago, according to data published Thursday by Argentina’s INDEC national statistics bureau.

A combination of Milei’s austerity, currency controls and tight monetary policy thwarted the pace of price increases at the start of the year, helping to bring more people out of poverty, which is defined locally as incomes that can afford the cost of a basic basket of goods and services. Milei lifted some FX controls in April when his government received a US$20-billion programme from the International Monetary Fund, but the peso didn’t devalue significantly and inflation continued to cool.  

Still, Milei’s advances against poverty haven’t been enough to keep voters on his side before the October 26 midterms when Argentina renews nearly half the seats in Congress. His party lost a key vote in Buenos Aires Province where poverty tends to be more elevated than the national average, a few weeks ago. That sparked a market sell-off that eventually led the USnited States to step in this week and signal an additional US$20-billion financial rescue. 

More broadly, Argentina’s recovery from Milei’s austerity at the outset of his presidency has stagnated recently with economic activity contracting for three straight months through July.

Unemployment remains elevated and informal jobs, which tend to have lower salaries and fewer job protections, have increased much more than formal, salaried jobs.