Shoppers cry out for change
Mauricio Macri will probably lose his presidency in the aisles of Argentinian supermarkets.
The country’s beleaguered shoppers, who have already endured a 60 per cent surge in food prices in just 12 months, will face even higher costs in the coming weeks.
The peso collapsed to new record lows last Monday and shops are already receiving bigger bills for imported products, such as oils and flour. Argentine markets were thrown back into turmoil after Macri’s centreRight government was thumped in the primary elections – a preliminary poll that decides who can run in October’s main vote.
Many Argentines hope that rejecting Macri will provide relief from double-digit inflation and a recession but economists believe it will see the dark days of Cristina Fernandez de Kirchner’s populist presidency return and lead to another debt default.
Opinion polls had put Macri’s market-friendly administration within touching distance of the Peronists – a strain of Leftist populism that has dominated Argentina’s modern politics. But last Sunday’s vote shattered that illusion, revealing a huge gap of 15 percentage points between Macri and Leftist opponent Alberto Fernandez, who has picked Kirchner as his running mate.
The following day the peso plunged 25 per cent, its stock market suffered the second biggest crash of any worldwide since 1950 and credit default swaps pointed to around an 80 per cent probability of Argentina failing to meet its debt obligations in the next five years.
‘‘It is the magnitude that has really shocked people’’, explains Paul Greer, a portfolio manager specialising in emerging markets at Fidelity International.
He says: ‘‘He [Macri] has an insurmountable hurdle and the market presses the fast forward button. It means the return of Left-wing politics in Argentina. It means subsidy increases, fiscal expansion, potentially capital controls, potentially nationalisations of private assets and wage increases.’’
The opposition party that has one foot in the Casa Rosada has a lengthy rap sheet with investors from its last time in power.
The Kirchners – Nestor and his aforementioned wife Cristina – ruled Argentina for 12 years between them. Cristina Kirchner, who left office in 2015, became a bogeyman for investors with her presidency marred by currency controls, falsified inflation figures, corruption charges and a fierce anti-investor rhetoric. Why are Argentines ready to bring Kirchner back into power, albeit as Fernandez’s vice president?
Macri and his pro-business government inherited an economy on its knees almost four years ago but has little to show for austerity measures and big promises of an economic recovery led by attracting foreign investment. – Telegraph Group