Tense politics yet improving activity

ARGENTINA - Report 08 Sep 2017 by Esteban Fernández Medrano

After relatively positive results for the government in the recent primary elections, the political heat ahead of the actual midterm elections is increasing, with particularly harsh cross-fire between Cambiemos and the Kirchnerists.

In what seems to be an attempt to shift public focus away from the judicial challenges of Cristina Fernandez de Kirchner (“CFK”), Kirchnerist congressmen and some trade union representatives have accused the government of abducting a social activist during a roadblock in the south of Argentina. The main target of the accusations has been Minister of Security Patricia Bullrich (coincidentally an aunt in the second degree of former Education Minister Esteban Bullrich, who is running against CFK for Senator in the Province of Buenos Aires). In the meantime, CFK was recently called by the general attorney for a new judicial inquiry, this time because of an alleged concealment during the investigation of the Iranian government’s involvement in the AMIA terrorist attack in Argentina in 1994.

While it is unlikely that any of those two accusations will have a significant impact on the decided Cambiemos or Union Ciudadana (FpV) voters, it might affect the undecided vote. For example, in the Province of Buenos Aires, secondary candidates such as Randazzo and Massa might “benefit” from the Cambiemos/Kirchnerist crossfire. In fact, despite his mediocre results in the primaries, Randazzo decided to continue in the race.

Even though the increased political tension might negatively affect consumer confidence in the short term, local activity data continues to improve. And thanks to the gradual improvement in real wages and employment, we expect consumption indicators to start improving over the coming months.

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