A political era is ending in Argentina. Over three consecutive four-year presidential terms since 2003, the country has been governed by the Kirchners: starting with the late Néstor Kirchner, who was president in 2003-2007 and was then succeeded then by his wife, Cristina Fernández de Kirchner, in 2009 (Néstor died in 2010). During that time, the economy experienced some impressively high growth rates, but since the ending of the commodities boom and the intensification of the government’s interventionist and heterodox economic policies, things have got worse. In particular, Argentina has been dogged in recent years by disputes with its foreign creditors, along with US dollar scarcities, high domestic inflation and stagnant economic growth. General elections are due to be held in October 2015, and this paper looks forward to what might be in store.
Summary
We argue between two scenarios: a bear scenario, in which the current difficulties drag on over the next few years, and a bull scenario, in which the economy re-inserts itself into the global financial system, attracting new investment inflows and recovering growth. We estimate that the likely outcome is the latter, more positive, scenario. However, these are still early days in a long election campaign and any optimism must be qualified. We give the bull scenario a 60-40 probability versus the bear one, and identify five key factors that may swing the pendulum back or forward between the two.