Today, Argentina will hold primary presidential elections ahead of a general election on October 27.
The major contenders are incumbent, market-friendly Mauricio Macri and left-leaning Alberto Fernandez. The key issues are high unemployment—currently over 9%—and a high inflation rate, which is currently hovering around 55%.
Mr Macri’s pro-business policies have helped bolster investor sentiment in the country, which has helped the peso appreciate against the dollar. He has promised austere economic reforms, including subsidy cuts and higher interest rates in the country to tackle Argentina’s high debt—currently 86% of GDP. If he fails to win the primaries, there is a high likelihood of capital flight and economic volatility.
However, Mr Macri’s austerity policies are not likely to be popular with the public, helping Mr Fernandez’s chances. He is expected to lead over Mr Macri by six points. Businesses are reluctant to see him win because his promises to cut interest rates and increase social spending will further weaken the peso, adding to the country’s debt.
Irrespective of the winner, Buenos Aires has a tough economic path to walk until 2021, when its debt payment of $56 billion to the IMF is due.
Wake up smarter with an assessment of the stories that will make headlines in the next 24 hours. Download The Daily Brief.