Argentina gets a bit more clarity on October’s presidential elections

The drama continued to unfold around Argentina’s presidential race last week as the leading candidates announced their running mates for October’s election. In return for the much-needed endorsement of Cristina Fernández de Kirchner, Daniel Scioli agreed to share the ticket with one of Kirchner’s closest allies, Carlos Zannini. This move, which ensures that Fernández will retain strong influence within the new government, was met with concern by markets and business leaders who see October’s elections as an opportunity to improve Argentina’s business environment.

The leading opposition candidate, Mauricio Macri, responded by nominating longtime ally and current senator Gabriela Michetti as his running mate. Machetti has strong popularity among low- and middle-income voters and should improve Macri’s vote count outside of his core constituency of urban, professional voters.

Overall, FSG continues to project a victory for Daniel Scioli in what should be a very close race. Scioli’s choice of Carlos Zannini as his running mate could mean that Scioli’s orthodox leanings may be constrained once he takes office, though the composition of the legislature is likely to be a more important factor.

One possible near-term impact of Scioli’s decision is that centrist Peronist voters may be inclined to question his independence and commitment to implementing the adjustments that Argentina needs to change the course of its economy. This could lead them to shift support toward the more market-friendly Macri and his charismatic pro-poor vice-president.

Under any scenario, one thing is certain – Argentina will experience some degree of macroeconomic adjustment in 2016 to 2017. The more salient question now is how deep these adjustments will be and what their impact on the Argentine economy and on multinationals will be.


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