2019 Elections: Economic Certainty and Political Uncertainty

Economic certainty and political uncertainty. Thus, the short-term scenario in Argentina can be summarized, in view of the October elections. This is a novelty, considering that the abrupt and abrupt triggers of the dollar and the price index have repeatedly affected previous electoral processes.
However, as we shall see, economic certainty is not without difficulties, while the political mystery shows few signs and novelties.

We know that the timely bailout of the International Monetary Fund, in addition to postponing a possible default or renegotiation of the debt to 2020, gave enough air to the government to insist on Mauricio Macri's candidacy at the next electoral turn. The significant funds provided by the IMF and its stabilization plan have managed to anchor the exchange rate, although inflation, recession, debt ratios and country risks remain very high. The government has managed to overcome the crisis and significantly improve the chances of the president to make a good paper during the certification of October.

With these developments, it is clear that the leadership of Cambiemos will try to reach the presidential elections by showing inflation and the dollar under control and, if possible, in economic growth. He will have the opportunity to position himself not as the cause but as the executioner of the crisis.

The government believes that it is the best possible scenario to achieve the re-election of the president. Therefore, try to prevent anything from going against this process; that is to say, it will seek to "freeze" the reality by baduming that the current "link" between Mauricio Macri and Cristina Kirchner will be transformed into a ruling party victory in October. So either this year, the government will launch initiatives to reform the country, causing the strong recurring imbalances that affect us several decades ago.: nothing that can change the electoral scenario that Cambiemos considers positive and predestined.

In this context, the government considers that it will succeed in the re-election of Macri with the operation of two turbo engines: achieving the zero primary deficit and the strong growth of the economy from the second quarter.

It is possible, although it is worth remembering here that all Exchange's economic scenarios over the past three years have failed. Will it be different now?

Perhaps the search for zero deficit, that the government is really determined to reach, is hampered by tax revenue problemsthat is, the recovery is worse than expected due to a longer or deeper recession than expected.

The second engine on which the government relies to ensure the re-election of Macri, the growth of the economy, stumbles for now with a contrary reality and uncertain forecasts. The vice-president of the national cabinet has just announced that strong signs of recovery were already emerging and that the recession had been left behind. In turn, several senior national officials have publicly stated that the next harvest will reverse the economic difficulties (apotheosis of all the Argentine governments of the last 150 years). In addition, economists related to Cambiemos say that the worst is over and they predict that the bad numbers in terms of inflation and recession are past. Despite the optimism, everything is subject to confirmation.

Recall that the main failure of IMF projects in Argentina and in other countries was due to overly optimistic calculations in recession-collection equation. They say that Mrs. Lagarde knows it and that this time the formula will be successful: "We have badumed in our model a very conservative badumption of growth", confesses a member of the technical team of the international organization that constantly monitors the economy of our country.

The government does well to focus on the economy. Argentines always look at our pocket before voting. That's why it's relevant evaluate the limits of this promise of change in relation to his electoral chances.

With a loss close to 15% of the power to purchase the salary and pensions with an impact on consumptionand, with very low levels of public and private investment, it is unclear how the government's forecasts for strong and sustained economic growth starting in the second quarter will be realized.

In the same vein, the sharp increase in tax burden induced by macro-management will most likely keep investment and job creation rates at a low level.

In addition, with the rescue of the IMF the government's economic and monetary policy intervened and, with that, eliminated its ability to continue to increase public spending, a key factor to better delineate the October election scenarios.

Indeed, Cambiemos won the 2017 mid-term election by two factors, mainly: fragmentation of the Peronist leadership and the excessive increase in public spending and debt. On the first factor, we will come back later. It is important to note here that President Macri will seek re-election without having the ability to increase spending, borrow or artificially promote consumption or credit, and without even having the resources of infrastructure. to mobilize the rest of the fabric. economic A whole new thing.

C & # 39; is to say, Let's change we will face the election campaign without a central factor: the availability of substantial funds to spend on a discretionary basis. So, we will have to see how the government's promise of economic growth is realized and most importantly, if the electorate will feel it in the October elections, so that predispose the vote better in favor of the candidates of the ruling party.

Think more long-term, another of the economic certainties that have confirmed The current process of crisis and stabilization is the impossibility for our country to get out of its structural backwardness without fundamental reforms; A truism that the current government, like almost all those who preceded it, however, rejected, preferring the results to come. Yes, doing the same thing results in the same results.

Turning now to politics, the electoral scene is marked by political uncertainty, because we do not know who the opposition candidates will be in the October presidential election. That Cristina Kirchner is present or not, in addition to affecting the electoral chances of the party in power and the opposition, has effects on the greater or lesser capacity of Peronism to adhere. and, therefore, to present only one candidate.

As we have already pointed out, the division of Peronism and the consecutive presentation of divided candidatures facilitated the triumph of Cambiemos in 2017 (and in 2015). Today, the opposition persists in a deep disorientation that favors Macri.

Contrary to the economic promises, the political-electoral scenarios proposed by the strategies of change were fulfilled, in 2015 and 2017. one of the greatest strengths of the government's national campaign team, which commands Marcos Peña. But his triumphs now represent a challenge for the future:how to win the October election despite poor economic performance, with no opportunity to increase spending and with public opinion at the moment, most of the time opposed the re-election of the president?

The government has drawn up its electoral plan on the basis of two political convictions: Cristina Kirchner will be a candidate and therefore, Peronism will participate in the divided presidential elections, that is to say with more than one candidate, which will lead to his defeat. One would expect the ruling party to continue to promote the former president's candidacy, as key to maintain the fragmentation of justicialismo and therefore, achieve the re-election of Macri.

However, a former Minister Kirchner warns us, on the contrary, that The difficulties the courts face daily Cristina Kirchner will propel her in an opposite direction.that is, its shift from the electoral scene, allowing the development of a unique Peronist formula by consensus.

In Peronism, two visions are confronted today. One (which is also touted by the government), argues that "The irrationality" of the former president will bring it to compete at all costs; What the hatred of Macri will make him lose the election. L & # 39; other Cristina Kirchner will make the decision not to compete at national level – or to do it in the province of Buenos Aires – in order to undo his judicial encerrona, anoint a transactional candidate -c & # 39; is in agreement with the rest of the Peronism- who can beat Macriand who will content themselves with placing it unconditionally in the lists of deputies, so as to maintain political and institutional power.

In any case, the electoral chance of change, we depend today on what happens in Peronism, which does not mean he manages to take control of the process, let alone frustrate Macri's re-election attempt.

The electoral scenario of today could be more likely to change to another one: the one signed by the emergence of a covered candidate (and this is already part of the policy) that arises in response to the demand of more than half of the population who refuses to choose between Mauricio Macri and Cristina Kirchner, and which succeeds in imposing itself by adding part of the vote of the two traditional contenders to that of the independents.

It's as if in a race between two parties, while we were all focused on the least bad gain, suddenly appears an unexpected rider with healthy legs who reaches the finish line first.

For the moment, a scenario without sufficient evidence in order to consider it seriously, but with an open result.