Business outlook: Corporate Argentina waits out the era of disappointment

Stability. Over three days at the IDEA Colloquium, no word appeared more often on the main stage of the Sheraton hotel in Mar del Plata. An analysis of every presentation on the main stage confirmed it.

Organized by the Institute for Business Development of Argentina (IDEA), the colloquium gathers senior executives from the country’s largest companies, politicians and economists every year. What government officials say there is closely read as a barometer of the government’s relationship with the private sector.

For Argentine executives, stability is less a buzzword than a wish. In the four decades since the return of democracy, Argentina has rarely known stable prices: since the end of Convertibility in 2002 alone, cumulative inflation has exceeded 250,000%. 

By contrast, according to Federal Reserve Bank of Minneapolis estimates, U.S. prices have risen roughly 1,900% since 1800.

Javier Milei understood that hunger better than anyone. In 2023, he turned society’s demand for predictability into a campaign promise, and won. Chainsaw in hand, he promised to balance the books, shrink the state and reverse decades of decline. He made inflation his yardstick: a number anyone can track, from economists to shoppers at the supermarket. In Argentina, inflation doesn’t just measure the economy. It measures politics.

Three years on, the trade-offs have arrived. Taming inflation has come at a political cost, and it keeps rising.

“We are in the era of disappointment,” one analyst said. The numbers back him up. Economic activity fell 2.9% month-on-month in July, and J.P. Morgan now expects the economy to contract in the third quarter. After five bruising months, loan delinquencies are at their highest in years, and the pain has reached even the president’s core supporters.

Milei himself acknowledged as much. Speaking from Paris in an interview with journalist José del Río at the close of the colloquium’s first day, the president said it was “perfectly reasonable” for investors to hold off until after the vote. “The option of waiting has value,” he said.

Business leaders seem to have taken him at his word. Wait-and-see was the dominant mood in the hallways, but the present weighed just as heavily. “Where is the economic activity? Has anyone seen it?” one executive quipped.

Another noted the irony in the president’s new tone. In 2023, faced with the same questions, Milei promised to take on everything. Now, with the economy stalling, he points to the institutional limits on what a president can do.

The doubts weren’t only about results, but about methods. An economist at the event told the Herald the program is “very dogmatic, especially monetary policy.” In his view, targeting the money supply makes interest rates highly volatile. That is hardly the predictability the business community came looking for.

For now, the only thing stable in Argentina is instability.