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Argentina's Market Slump: Milei's Political Setback Shakes Investor Confidence
Following Javier Milei's electoral defeat in Buenos Aires, Argentina's Merval index has plummeted approximately 30% in 2025, becoming the world's worst-performing stock market, fueled by concerns over stalled reforms and potential political gridlock.
- What is the primary cause of Argentina's sharp market decline in 2025, and what are its immediate consequences?
- The main cause is the unexpected electoral defeat of President Milei's party in Buenos Aires, raising concerns about his reform agenda's viability. Immediate consequences include a 30% drop in the Merval index, making it the world's worst-performing market, a surge in Argentina's country risk above 1200 points, and the peso hitting record lows against the dollar, forcing central bank intervention.
- What are the potential future implications of this market downturn, and what factors could influence a turnaround?
- The October legislative elections are crucial; a Milei victory could restore investor confidence. However, an opposition gain could further hinder reforms, prolonging the downturn. A significant weakening of the dollar (20-30%) is seen by some analysts as a key factor for stimulating economic activity and allowing the central bank to rebuild reserves.
- How did investor sentiment toward Argentina shift from 2024 to 2025, and what broader economic factors are at play?
- In 2024, Milei's election initially boosted the Merval by over 22%, driven by expectations of fiscal reforms and privatization. However, 2025 saw a dramatic reversal due to Milei's electoral setbacks and concerns about political gridlock hindering his economic plans. Factors such as economic stagnation, corruption scandals, and closed access to financing markets exacerbate the situation.
Cognitive Concepts
Framing Bias
The article presents a balanced view of the situation, acknowledging both positive and negative aspects of Milei's presidency and the impact of the Buenos Aires election results. While it highlights the market's negative reaction, it also includes counterpoints from analysts who suggest the situation is not irretrievable. The article presents both optimistic and pessimistic perspectives, thus avoiding overly positive or negative framing.
Language Bias
The language used is largely neutral and objective. While terms like "worst-performing" and "resounding electoral defeat" are used, they are factually accurate and avoid overly emotional or charged language. The inclusion of direct quotes from analysts adds to the neutrality.
Bias by Omission
The article could benefit from including perspectives from ordinary Argentinians, not just investors and analysts. Additionally, a deeper exploration of the specific policies contributing to the economic shifts would provide a more complete picture. While space constraints likely play a role, including some additional voices might strengthen the analysis.
Sustainable Development Goals
The article details a significant decline in Argentina