Economist Miguel Ángel Broda stated that Argentina is facing a unique opportunity to «emerge from a long period of decline,» a scenario he «has only witnessed twice in my professional career,» and stressed the need to accumulate reserves.
According to Argentine News Agency (NA), citing statements to Radio Rivadavia, Broda noted that when analyzing economic growth theories and the country's current situation, «it is very difficult not to be optimistic» if certain fundamental conditions for economic development are met.
However, he warned that this promising outlook is not without risks, emphasizing that macroeconomic stability «is by no means guaranteed.»
The economist highlighted the need to transition from a closed, corporatist economy to an open, competitive, and free one, although there are «many pending tasks» to ensure a sustainable growth path.
Broda explained that the success of economic growth depends on having inclusive institutions not determined by «corporatism» or «clientelism,» and on attracting capital with clear rules of the game and universal property rights.
«The success of economic growth, which is the end goal of the economy, basically comes from having inclusive institutions,» he affirmed. To this, he added the renewed interest of U.S. foreign policy in Latin America, positioning Argentina as a key interlocutor for new investments with innovative technology.
Nevertheless, he warned that the country still has «many pending tasks to ensure macroeconomic stability,» citing cases like Tierra del Fuego, and pointing out errors and aspects he dislikes, such as the lack of importance placed on the role of human capital to increase productivity.
In his analysis, the economist was critical of some of the government's economic decisions. He stressed the need for a «simple» monetary policy that avoids the «madness of real interest rates» and that the increase in money demand be supplied with credit to the private sector, not with primary expansion.
Additionally, he emphasized the urgency of «accumulating reserves» and the need to boost a real sector he considers «very punished» and «stagnant since February.»
Broda rejected the idea of using the exchange rate as a tool to lower inflation: «It is not appropriate to use the exchange rate as the instrument to lower the inflation rate. It has not worked anywhere.» He also proposed moving towards a managed float of the peso, with a Central Bank (BCRA) that has reserves to intervene when necessary, avoiding «more innovation» and instead «copying» successful models from other countries.
He estimated an equilibrium exchange rate between $1,650 and $1,700, stating that this should not «frighten us so much.»
Regarding President Javier Milei, Broda acknowledged that «for the first time in history» Argentina has a president «who understands the sources of growth.» However, he identified a lack of «a team of 100» for state management, an institution he considers «absolutely necessary to grow,» although it had been «oversized.»
He also highlighted that making a «normal country» will take «20 years» and will require tax, labor, fiscal, and pension reforms. Despite the difficulties, he expressed an «optimistic» outlook with a 50% to 60% probability that Argentina will manage to escape «100 years of decline,» although he clarified that «by no means are we on a sure path.»
In parallel, Broda recalled his past with Milei at his consultancy firm (Estudio Económico-Financiero M. A. M. Broda y Asociados), praising his intelligence but noting that at the time it was difficult for him to «make the leap» from theory to practice to «understand the crazy economy of Argentina».
