The Argentine government’s experiment with ‘chainsaw economics’ has delivered some notable successes, despite its many controversies; and its architect, President Javier Milei, remains remarkably popular heading into mid-term elections this October. What’s going on in Argentina illuminates two themes that have emerged in South America. One is the painfulness of the choices to be made when dealing with dysfunctional public finances. The other is the potential resurgence of the political right, with key elections taking place in Brazil, Chile, Colombia and Peru (among others) between now and late 2026. These two themes will play out in different ways. In Chile and Peru, countries where the need for fiscal radicalism is lowest, elections may tilt to the right without any great effect on economic policy. On the other hand, in Brazil and Colombia, where public debt dynamics are more obviously unsustainable, fiscal consolidation will not merely depend on a shift to the right, but also on a Milei-like willingness to take very tough decisions.
Milei’s Argentina shows where South America might be heading (David Lubin – Chatham House)
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