A version of this post appeared on Edelman.lat
With the eyes of the world on its future, this year Argentina will hold presidential elections, with voting in August (primaries), October (general election) and possibly November (runoff if needed). After a year that began with ups and down, during the last month a series of events have clarified the political landscape and firmed up the country’s economic course.
By early June, after weeks in which the volatility of macroeconomic variables caused speculations about his candidacy, Argentine President Mauricio Macri launched the formula through which he hopes to be re-elected, to the surprise of many, accompanied by Miguel Ángel Pichetto, a historic leader of the National Senate’s Peronist bloc, as a candidate for vice president.
While this strategic shift points to a change of positioning from the Cambiemos alliance with the Radical party (which is quite marginalized in this new scheme), the news not only worked as a trigger to end still-pending alliances but also settled down the market and contributed to the stabilization of the main economic indicators:
- The dollar recovered its level from last March, losing almost five pesos from the peak of nearly AR$47 reached in May.
- The benchmark interest rate, based on the daily auction of short-term Leliq notes, has been in steady decline since then, dropping about eight points and returning to the levels of the beginning of the year (around 59 percent); it is expected to continue on a downward trend.
- As for the country’s risk, after triggering at the beginning of June a risk level above 1,000 points, since the announcement the risk level lost more than 200 points and currently stands at 785.
- Likewise, the positive impact also reached the performance of Argentine securities. While the Merval again reached its historical maximum of 42,807 points—accumulating a rise in dollars of 29 percent—Argentine securities on Wall Street have experienced growth.
With these results and with two consecutive months of decelerating inflation, the first surveys suggest an increase in Mauricio Macri’s positive image (under the banner of the Juntos por el Cambio coalition).
Meanwhile, a new mission of the International Monetary Fund has just approved the fourth revision of the stand-by agreement, and David Lipton, Acting Managing Director, confirmed access to another $5.4 billion, recognizing the country’s improved economic course.
Finally, the Macri administration recently achieved another triumph as one of the main actors behind the signing of the Mercosur-European Union Agreement trade deal.
Although there is still a long way ahead in an election year that will be marked by strong polarization between the current government and the counterpoint of the Fernandez-Fernandez ballot, the steps taken by the administration to reactivate the economy seem to be having a positive effect.
We invite you to join us on the road to the August primaries in an Argentina that seems to be taking off again after a few falls.
This post was written by the Edelman Public Affairs team in Buenos Aires.