Macro outlook ahead of the elections
Contrary to former elections, some of the key electoral positions will be defined through the primaries. This is a change from former years, when the primaries were usually mere “national polls”.
The composition of the pre-candidates for Juntos por el Cambio (JxC) in the City and Province of Buenos Aires reflects the imprint of Horacio Rodriguez Larreta, who has positioned himself in these primaries as a kingmaker with the potential to lead JxC, a role previously reserved to Mauricio Macri. These primaries also reflect the UCR's intentions to emphasize its importance in the JxC coalition in order to have more of a say ahead of the 2023 presidential election.
One of the main difficulties that Frente de Todos (FdT) faces in these elections is the deterioration of public confidence in the government and particularly in President Alberto Fernandez. FdT needs 8 additional votes to have its majority in the Lower House, i.e., it would need to gain 59 seats of the 127 in play. At this point, it seems a difficult goal.
The key political asset in favor of the government is that it has managed over the past few months to significantly accelerate the speed of vaccination above what was observed back in May. Despite the risk of the Delta variation, we would expect the government to lift the remaining COVID-related economic restrictions before the elections in November.
Contrary to Economic Minister Martín Guzman’s wishes, there are no convincing signs of growth. But over the last year and a half, commodity prices improved, the official TWRER has remained relatively stable and not over appreciated, and the fiscal accounts have been slowly recuperating from the 2020 shock. If we add this to the likely lifting of COVID restrictions and the expected negotiations with the IMF, one can share Guzman´s hopefulness.
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