Milei sinks Argentine industry and country becomes hostage to speculation

The ultraliberalism imposed by Javier Milei since his inauguration at Casa Rosada in December 2023 is destroying Argentina’s industrial base. According to data from consultancy Equilibra, in Buenos Aires, 36 out of 55 economic segments recorded severe losses in the last two years.

The falls are catastrophic in strategic sectors such as footwear, with a decline of 29.8%, and textiles, which shrank by 27.1%. In the footwear sector, the closure of one hundred factories — equivalent to 10% of the industrial park — led to mass layoffs and deepened hunger in the industrial peripheries, highlighting the social cost of “shock therapy”.

Official data from the National Institute of Statistics and Census (Indec) confirm the production disaster, with general industrial production showing a drop of 11.4% in the period. The automotive sector, once national pride, shrank 14.3%.

Low investment in fixed capital and little foreign exchange reserve

The wild trade opening, which reduced import tariffs on footwear and clothing, in addition to eliminating taxes on electronics, flooded the market with Asian products. This process, combined with the exchange rate flexibility in 2025, caused imports to grow 24.7%, destroying jobs and Argentine production.

Although the government trumpets macroeconomic victories, the closing indicators for 2025 reveal a structural fragility that isolates Argentina from its neighbors. While Brazil and Mexico registered industrial growth of 1.5% and 2%, respectively, the millennial industry is struggling in the face of an 18.2% drop in investment in fixed capital and a 14.1% collapse in civil construction, following drastic cuts in public works.

The scenario contrasts even with Chile, which, despite historic economic openness, maintained stable reserves at US$40 billion and persistent surpluses. On the other hand, Argentina’s gross reserves begin 2026 stagnant at US$28.3 billion — a value far removed from the US$45 billion needed for real stability —, which leaves the country dangerously dependent on external credit to roll over its US$44 billion debt with the IMF.

Although Milei tries to negotiate new rolls and deadlines, the absence of real surpluses supported by a value-added industry turns the flow of payments into a trap, addicted to the volatility of dollars coming from agribusiness and financial speculation.

The illusory optimism of the financial market

Contradictorily, the financial market maintains selective optimism about the country, ignoring the collapse of factories in favor of “zero deficit” and the drop in monthly inflation. For investors, monetary stabilization at the cost of recession and the deregulation of sectors such as mining and energy are seen as positive. However, analysts warn that this “recovery” is illusory and uneven: while the financial sector and agro-exports grow, domestic consumption and wages remain stagnant, with industrial unemployment rising to 12.5%.

The projection is that, without a strong industry that generates added value in dollars, reserves will fall to US$20 billion by 2027, forcing the country into a new default or hyperinflation. Unlike Brazil and Mexico, which diversify their industrial exports, Milei’s model colonizes the economy, transforming it into a raw material export enclave that enriches banks, but condemns working people to poverty.