Argentina’s Economic & Political Prospects

Argentine Ministry of Culture / CC BY-SA 2.0

Recent policy shifts by the administration of President Cristina Fernández de Kirchner indicate that the Argentinian economy will be able to “muddle through” until presidential elections in 18 months. This, in turn, will enable a relatively peaceful government transition.

“I think what we’re about to see in Argentina,” observed Daniel Kerner, practice head for Latin America at the Eurasia Group, “is what’s going to be a relatively long, difficult, and sometimes very noisy, but I think ultimately peaceful political transition away from the Kirchner era.”

Kerner’s remarks came during a meeting on “Argentina’s Economic and Political Prospects,” held at the Dialogue on April 14.

For his part, Gustavo Cañonero, chief economist for emerging markets at Deutsche Bank Securities, noted that the beginning of Kirchner’s reforms coincided with health problems and a stunning electoral defeat last fall, suggesting that she acted on a realization of her political and physical mortality.

Looking forward, Cañonero expects authorities will take positive measures with painful short-term consequences—including a recession—to limit inflation and bring about ultimate economic gains. Despite these developments, however, Cañonero emphasized that “Argentina is seeing a change in policy rather than policymakers,” and the ideological constraints of the administration will limit the scale of reforms they are able to make.

From the political perspective, Kerner argued that the Argentina’s elites are committed to helping Kirchner finish her term in office, which will maintain stability in the country and ensure a peaceful transition to the next government.

Because Kirchner will thus be able to remain in charge of policy, and due to the long-standing influence she and her husband—who preceded her in office—have had on Argentinian politics, the results of next year’s presidential election will depend largely upon her actions over the next 18 months. Nevertheless, Kerner noted that the three main presidential candidates have distanced themselves from Kirchnerism, portending significant changes in the direction of the country following the next election.

Summarizing Cañonero’s and Kerner’s presentations, Dialogue Program Director Ariel Fiszbein, who moderated the event, argued that it appears the transition to the next presidency “is manageable on the economic front, [and] it’s probably manageable on the political side… the question mark is whether it’s manageable on the social side,” as the changing policies begin to affect the public.