Argentina and Türkiye: a tale of two adjustments

David Lubin, a Senior Research Fellow at Chatham House, in this OMFIF article compares economic reform in Turkiye and Argentina:

Financial fragility among emerging economies these days is mostly found among the poorest, notably across sub-Saharan Africa. That said, Türkiye and Argentina, two relatively wealthy developing countries, have bucked this trend: both economies have been characterised in recent years by a persistent malaise that has triggered vast outflows of capital, very large currency depreciations and inflation at intolerably high rates, with all the misery that entails.

Yet both countries now have governments determined to clean up their economic mess, though each has chosen different paths towards stabilisation: ‘shock therapy’ in Argentina under its new President Javier Milei, and ‘gradualism’ under President Recep Tayyip Erdoğan in Türkiye.

Success is far from assured in either country. But for a raft of reasons, it is Türkiye that has the best chance of improvement. That’s not because gradualism is inherently more reliable than shock therapy; but rather because Türkiye’s problems are shallower than Argentina’s, and because the domestic politics and the geopolitics around Türkiye’s stabilisation seem more promising.