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Under the leadership of Javier Milei, Argentina implemented neoliberal reforms that resulted in a record trade surplus and the appreciation of the Argentine peso. Meanwhile, Brazil, under Lula, faces a deficit and the devaluation of the real.
As Brazil stumbles over its own economic challenges, one of its neighbors is accelerating toward a brighter future.
A Argentina, under the leadership of President Javier Milei, has implemented drastic changes that are shaking up Latin America and bringing surprising results.
But what is behind this movement that has put the “hermanos” ahead in yet another requirement?
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With an aggressive neoliberal approach, Milei's "chainsaw" plan is already beginning to bear visible fruit.
The mega-package of reforms includes the privatization of state-owned companies, changes to labor laws and a broad deregulation program.
These efforts have resulted in a record trade surplus of nearly $19 billion in 2024, putting the Argentine economy in the spotlight on the global stage.
The Argentine Peso and the Real: Opposites in Performance
One of the most symbolic factors in Argentina's progress was the performance of its currency.
In 2024, the Argentine peso stood out as the most valued currency in the world, contrasting sharply with the Brazilian real, which was one of the currencies that lost the most value in the same period.
According to analysts, the performance of the Argentine peso reflects international confidence in the economic reforms implemented by Milei.
On the other hand, Brazil faced a challenging scenario. Under President Luiz Inácio Lula da Silva, the country recorded a deficit of R$66,8 billion until November 2024.
Despite a slight improvement in the structural fiscal deficit, announced by the Ministry of Finance, the numbers still worry experts and investors.
Policy Comparison: Milei vs. Lula
The difference in strategies adopted by the two countries could not be more evident.
While Milei bets on the streamlining of the State and the liberalization of the economy, Lula's government has faced criticism for the lack of significant progress in its economic policy.
Measures such as income redistribution programs and stimulus to domestic consumption have not yet managed to reverse the negative rates.
Furthermore, the lack of a clear strategy to contain the devaluation of the real worries the market.
According to experts, exchange rate volatility and fiscal instability are among the main challenges that Brazil needs to face to regain the confidence of international investors.
The impacts of Argentine reforms
Argentina not only reaped financial benefits from Milei's reforms, but also strengthened its position in international trade.
The trade surplus of nearly $19 billion in 2024 was driven by a number of factors, including increased agricultural and industrial exports, as well as reduced operating costs for local and foreign companies.
Experts say that the privatization of state-owned companies and labor flexibility have increased the country's economic efficiency.
However, critics warn of the possible side effects of these changes, such as increased social inequality and precarious working conditions.
Brazil going against the grain?
While Argentina moves forward with neoliberal reforms, Brazil appears to be moving in the opposite direction.
The Lula government has prioritized social protection policies and an increase in the minimum wage, but is facing difficulties in balancing public accounts.
The structural fiscal deficit, although showing a slight improvement in 2024, is still a significant obstacle to sustainable economic growth.
Another point of attention is Brazilian competitiveness in the international market.
With a devalued currency and economic policies considered unattractive to foreign investors, Brazil runs the risk of losing space in strategic sectors, such as agribusiness and the technology industry.
What to expect from the future?
The economic trajectory of Argentina and Brazil in the coming years will depend on a number of factors, including global market conditions, the domestic policies adopted and the ability of both governments to deal with structural challenges.
While Milei is betting on the continuity of liberal reforms, Lula will have to find innovative solutions to stimulate growth without compromising fiscal stability.
Question for reflection
Do you believe that Brazil should adopt measures similar to those of Argentina, even with the social risks they may bring? Leave your opinion in the comments!
Extol and relate the gains for the Argentine population that should be the president's concern.
Argentina's economy is indeed showing signs of recovery, but it is doing wonderfully for those who already have various privileges. Despite the growth in GDP, poverty and unemployment have increased. The poor are getting poorer, the rich are getting richer, that is the neoliberal policy.
Please: “…in one more QUESTION.”
“REQUISITO”, from the verb requisition????