The tectonic fracture of Argentina’s economy

In the first 10 months of this year, Argentina’s mining sector set a record for exports for the period, US$4.8 billion. In October, the country pumped more oil than it had ever before: 859,000 barrels of oil per day. The oil and gas sector delivered a trade surplus of US$ 6 billion in the first 10 months of the year, more than the total in 2024.

This is the beginning of the game-changer for Argentina’s economy, anticipated for years and slowly happening. President Javier Milei has contributed to this outcome, but it is not solely the result of his actions. He is, however, the President that – if he does things right – will benefit from a country that will have an influx of US dollars not seen since the big commodity boom of the early 2000s – a bounty which helped Milei’s nemesis political movement, Kirchnerism, rule supreme for more than a decade.

The Kirchners used the influx of money to first pay the International Monetary Fund almost US$10 billion in cash and then finance wealth-distribution policies, including the AUH universal child benefit payment that continues to be a cornerstone of Argentina’s social welfare system, and a massive pension amnesty that allowed millions of people to enjoy retirement benefits without having contributed much during their working lifetimes. These policies helped the Kirchners win two re-elections: 2007 (Cristina I) and 2011 (Cristina II).

Milei is the opposite. The cornerstone of his programme is fiscal responsibility: the chainsaw. He will use any surplus to repay Argentina’s debts but the question haunting investors now is whether this new cash will be enough to cover that debt – plus the country’s consumption.

The answer is simple: it will not. This is at least the consensus that a group of experts at the School of Economics of the University of Buenos Aires has reached by comparing the level of natural resources the country has to other nations. UBA Economists Juan Carlos Hallak and Andrés López made a simple calculation of how much in natural resources Argentina exports per capita. It was US$1,184 in 2024, which is less than a third of Chile (US$ 3,594) and less than 10 percent of Australia (US$13,000) – let alone if you compare it with commodity kings the United Arab Emirates (US$23,886) or Qatar (US$40,873).

This is today’s picture but tomorrow’s film does not structurally differ much. If, as optimistic estimates predict, the country’s exports in energy and mining double or triple in the next half decade, by 2030 Argentina would export just over US$2,000 in natural resources per capita.
A fully commoditised Argentina is not viable for 45 million people and counting hoping to live decent lives and a government willing to pay all its debts. Milei, however, does not seem to care much about this consensus and, instead, is telling Argentines that the promised future will come from these star sectors.

That is why one of the government’s priorities this summer will be to amend a law that protects glaciers in the Andes Mountains so that mining companies have more flexible rules to explore and exploit resources. The mining sector says the law, passed in 2010 under Cristina Fernandez de Kirchner, is too restrictive and unclear about which areas are protected. Former president Mauricio Macri tried and failed to change it. Milei, riding high on political momentum, stands a better chance – especially since the governors from mining provinces in western Argentina are all eager to throw their support behind it. The new version will leave it up to them to establish which areas should or should not be protected.

While those regions hope to thrive, the outskirts of Buenos Aires are suffering. Argentina’s economy is splitting as if a tectonic fracture was taking place. This week, without prior notice, a modern home-appliance plant of the US firm Whirlpool closed in the city of Pilar, leaving over 200 people jobless. It had been inaugurated with great fanfare right after the pandemic in 2022. But now imports from China are raging: in 2023, the country imported 51,000 washing machines; so far in 2025, 916,000 units, according to the UIA manufacturing association figures. The same applies to other consumer goods. 

In the coming months (and years?), each Argentine will have to watch on which side of the divide they land.