Argentina shows SA what reform can achieve

Key points

• Argentina’s shift to a libertarian, free-market approach under Milei, achieving a budget surplus and 7.6% GDP growth in Q2 2025, contrasts with South Africa’s stagnant economy, highlighting the need for bold leadership to shrink the state and boost private sector growth.
• South Africa’s high debt, maladministered SOEs, and low Gross Fixed Capital Formation hinder growth, with the ANC’s state-controlled ideology undermining Operation Vulindlela’s reforms, unlike Argentina’s successful privatisation and deregulation.
• Argentina’s economic variables, from inflation to GDP growth, show the benefits of privatisation. There are lessons in Argentina’s experience that we hope the government will pay attention to. Should the economic recovery in the Argentinian economy gain traction, there will be many parallels drawn with SA, and one hopes that the government applies some of those lessons to boost SA’s GDP, employment and financial market prospects.

Baseline view

The conclusion is that SA has the potential to achieve so much more and turn its fortunes around if the government allows it. For now, and under the current leadership, which seems unlikely, the ZAR will consequently need to trade at a discount. However, should reforms be targeted, the benefits to the country would be substantial and drive a significant improvement in the purchasing power of every rand.

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