Milei ‘The Madman’ Is Back in Davos After Racking Up Victories in Argentina

(Bloomberg) — Javier Milei, Argentina’s brash, libertarian president, is (mostly) OK with the nickname pundits have given him: “el loco,” or “the madman.”

But he’s quick to point out that what separates a madman from a genius are results. And as he returns to Davos a year after he shook up the crowd there by firing off one bold declaration after another — like his opening salvo: “I’m here to tell you that the Western world is in danger” — Milei has plenty of results to show off.

The monthly inflation rate has plunged to below 3% from more than 20% when he made his Davos debut a year ago; the government posted its first annual budget surplus since 2009; and the economy has begun to pull out of the recession it fell into when Milei devalued the peso and imposed harsh budget cuts two days after taking office in late 2023.

“His diagnosis of the problem in Argentina is 100% correct,” says Graham Stock, the senior emerging markets strategist at BlueBay Asset Management. Stock watched Milei’s Davos speech from his office in London a year ago. It was a barnburner — heck, Elon Musk even equated it to having sex — but “what matters is the commitment to that central policy tenet, which is a balanced budget,” Stock says. “Everything else flows from that.”

Bluebay owns Argentine bonds, which have posted a furious rally under Milei — more than 100% in all, topping the returns generated by almost every other emerging-market country. So it’s logical enough that Stock, and, for that matter, most of the Davos crowd, is thrilled with Milei.

What’s more surprising — and much more crucial to the long-term viability of Milei’s economic overhaul — is that Laura Velasquez is thrilled with him, too. Velasquez, 19, peddles T-shirts and dresses for a few dollars a piece to supplement the income she makes at a fast-food joint just southeast of Buenos Aires. 

The inflation surge that followed Milei’s decision to let the peso plunge hit Velasquez hard, and the draconian cuts to government programs and subsidies exacerbated her family’s financial squeeze. But the economic stability that’s followed the initial chaos has won her over. For the first time in years, prices no longer jump from one day to the next, and commerce flows smoothly, without all the merchandise-hoarding that was so common in moments of crisis before. 

“Everything just feels calm,” Velasquez says. She voted reluctantly for Milei in 2023. Now, she says, she’d eagerly vote for him.

Velasquez represents the millions of working-class Argentines who have, to the surprise of many, steadfastly stuck with Milei. In December, his approval rating was 47%, little changed from the backing he had when taking office and far higher than that of any of his political rivals, according to a survey carried out by AtlasIntel for Bloomberg News.

Stock points out that this sort of broad support for deep budget cuts had been missing in Argentina, a country that’s defaulted on its debt three times this century. That Milei has maintained this support so far “has led to quite a lot of optimism about the outlook,” he says.

Holding onto it won’t be easy.

Despite his viral tirade against state intervention at Davos last year, Milei’s victories have been buoyed, in part, by controls that carefully limit the currency’s slide. Starting Feb. 1, the peso will be allowed to weaken 1% a month — a glacial pace for a country with inflation above 100% a year. Milei promised to somehow release that clamp, alongside a litany of capital controls put in place by his predecessors, this year. But even the most minor misstep could send inflation spiraling just before Argentines head to the polls for October midterm elections.

To soften the blow in the case of a currency selloff, the government needs the International Monetary Fund to beef up its hard currency reserves. Yet with 22 failed rescue programs under its belt — the latest worth about $44 billion Argentina still needs to pay back — the Washington lender will need reassurances Argentina won’t squander its resources just to prop up an overvalued peso as it has so many times before.

Milei’s budding bromance with President Donald Trump could help make the case. (The US is the Fund’s biggest shareholder.) Milei will land in Switzerland Wednesday morning fresh off a visit to Washington for Trump’s inauguration, their third time meeting in a year. Milei and his economy minister, Luis Caputo, also seized the US trip to meet IMF Managing Director Kristalina Georgieva on Sunday.

Diego Espinoza, a 35-year-old Milei fan selling flip-flops at the same sprawling open-air market Velasquez buys her merchandise, bets Milei will pull it off. The Buenos Aires shop’s logo is a purple roaring lion’s head — also Milei’s insignia and campaign color — which he chalks up to a coincidence.

“Everything went up a ton this year,” he says, pointing to a pair of plastic black flip-flops that cost $2 a year ago and spiked to $5 this year. He’s certain that price is here to stay. “The hardest part is over.”

Espinoza’s aunt, Maria, shakes her head as she stacks clear bags of pink, yellow and white kids’ plastic clogs.

“Everything is really hard. Prices are still very high,” she says. Asked if she supports Milei, she says she doesn’t vote and points to her nephew. “He does.”

To secure a fresh IMF loan, exit capital controls without stoking more inflation and hold onto his approval ratings without opening the purse strings — all with a weakened but power-hungry opposition in the lurk — seems a challenge only a madman would dream of pulling off. A year ago, Milei would point out, most pundits said the same about his austerity plans.

“A year in, Milei’s shock therapy has proven much more successful than I initially expected,” Ian Bremmer, founder of the Eurasia Group, said in an interview by email. During the election, Bremmer had predicted Milei would bring “more economic collapse imminently.”

Bremmer, a WEF regular who heard the impassioned speech from the packed crowd last year, added, “It’s quite possible we’ll be looking at an even more triumphant Milei at Davos 2026.”

–With assistance from Cagan Koc and Viktoria Dendrinou.

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