Oct 29, 2019

Fernández win shifts vision for Argentina's economy

Argentina's President-elect Alberto Fernández. Photo: Marcos Brindicci/Getty Images

The inauguration of Alberto Fernández as Argentina's president on Dec. 10 will reorient both the country's macroeconomic policies and its hemispheric relations.

Why it matters: Fernández pledged to address economic concerns that have deepened despite efforts by incumbent president Mauricio Macri to right the economy. But Fernández's running mate — former President Cristina Fernández de Kirchner — has a mixed economic record from her 2007–2015 term, which saw growth-slowing restrictions placed on trade and foreign currency exchanges.

Where it stands: During the campaign, Fernández targeted moderate voters while Kirchner helped to turn out Peronism’s strong, traditional base. They will face a divided Congress.

  • Fernández and Macri held a cordial meeting on Monday and promised an orderly transition, helping to momentarily assuage investor concerns.
  • Argentina’s $57 billion IMF rescue package — the largest in the fund’s history —brought stability amid a peso run last year but demanded heavy sacrifices by everyday Argentines, who bore the brunt of austerity measures. Fernández has pledged to work with the IMF while indicating that some adjustments will be necessary.
  • Although the clear outlines of an economic plan have yet to be announced, Fernández has promised to reduce inflation and boost wages. He will have to advance those plans without arousing fears of a return to full-throated state intervention.

What to watch: The election will also reverberate across South America.

  • There's a heightened risk of rupture in the Mercosur trade bloc, which could spell trouble for its large, interdependent economies and jeopardize a recently signed EU-Mercosur free trade agreement. Brazilian President Jair Bolsonaro has questioned Argentines’ wisdom in electing Fernández and said he would chart his own course if Fernández resorts to protectionism.
  • Macri has been an outspoken supporter of Venezuela's interim government, but under Fernández, the Lima Group could lose an important ally (he has said that membership runs counter to resolving the crisis). Since its founding two years ago, the now 14-member group has helped Latin American governments apply coordinated diplomatic pressure on Nicolás Maduro.

Jason Marczak is director of the Atlantic Council’s Adrienne Arsht Latin America Center.

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