Voters in South America’s second-largest country will head to the ballot box on Sunday, less than three months after a dress rehearsal for the vote set off a shockwave in financial markets.
It is widely expected that Argentina’s President Mauricio Macri will be defeated by the opposition ticket of center-left Alberto Fernandez and populist ex-leader Cristina Fernandez de Kirchner.
The first round of the presidential election comes as the country is facing a debt crunch, with the worst rout of the country’s stock market in decades raising fears of a possible default.
The latest opinions polls indicate that Fernandez could beat the center-right incumbent by almost 20 percentage points on Sunday. That would almost certainly be enough to win the presidency outright.
Argentine law states that to win the presidency in the first round of the election a candidate must reach 45% of the vote, with a margin of victory of 10 percentage points over their nearest rival.
Even if the incumbent managed to progress to the second round, “it would be very, very, very difficult for Macri to recover and win the election,” Carlos de Sousa, senior economist for Latin America at Oxford Economics, told CNBC via telephone.
“The economy is only getting worse. People are getting angrier and angrier and most Argentines are blaming Macri for this.”
In early August, the primary – seen by many as a key gauge for the first round of Argentina’s presidential election – produced a result which many interpreted as a clear signal that voters were ready to reject the ruling government’s austere economic policies.
Fernandez received 47.8% of the vote on August 11, with Macri taking 31.8%. It has cast serious doubt over the president’s chances of making it to a second-round run-off vote in late November.
The center-right president came to power four years ago promising that his pro-market reforms and business-friendly leadership style would finally rid the country of endless economic turmoil.
But, Macri now appears likely to leave office with the economy in a worse state than it was when he inherited it.
At present, inflation is running at an annual rate of 55%, the peso has plummeted, billions of dollars of foreign reserves have fled the country, the economy has been in a deep recession and the country has also had to delay payments on around $100 billion of local and foreign debt.
Oxford Economics’ de Sousa said there would be “no way” for Fernandez to bring about a strong economic recovery, should he win outright on Sunday.
“Argentina will not be able to recover as quickly as it did from the 2002 crisis,” he added, referring to the country’s historic default.
Back to square one?
In the short term, analysts told CNBC that the focus was on how Argentina’s next president planned to deal with the International Monetary Fund ( IMF) and other creditors.
“Everybody needs to see an economic plan – not least the IMF,” Jimena Blanco, head of Americas research at risk consultancy Verisk Maplecroft, told CNBC via telephone.
Fernandez has previously said he wants to renegotiate the terms of Argentina’s historic $57 billion standby agreement with the IMF, aggravating worries of a debt restructuring.
When asked whether Latin America’s third-largest economy was at risk of defaulting over the coming months, Blanco replied: “You can’t rule anything out in Argentina.”
“This is certainly a concern for institutional investors – and corporates as well.”
“But, the main concern for people is: will the next administration try to keep some of Macri’s policies or are we going to go back to square one?”