Argentine Election Not Expected to Bring Change

If, as expected, Cristina Fernandez de Kirchner wins the election, analysts expect few changes in economic policy. “Her policies would be oriented towards maintaining a competitive exchange rate [and] keeping the fiscal and external accounts in surplus,” says Goldman Sachs. It adds that government intervention in the economy will remain high. To deal with inflation, risks of a wage-price spiral, a deteriorating fiscal position and a growing energy crisis, the shop expects the new administration to seek agreements with labor unions and the industrial sector. It also expects Kirchner II to tighten the fiscal stance by moderating the pace of growth in public expenditure. “We would not expect changes in terms of FX policy (which would remain focused at maintaining a competitive currency) or monetary policy (which would likely remain accommodative),” says Goldman. It is unclear who will lead the economic team, though press reports suggest former central bank president Mario Blejer, current central bank president Martin Redrado and the current economy minister Miguel Peirano may play a role. Kirchner will have to appoint a team by December 10.