Argentine recession hampers Macri's re-election bid

by Nina NEGRON
Argentina's President Mauricio Macri faces an uphill battle in his bid for re-election

Following a painful 2018 that left Argentina in recession and forced into unpopular austerity measures, President Mauricio Macri faces an uphill battle in his bid for re-election in October.

But while the statistics from his "annus horribilis" make grim reading -- inflation initially calculated at 10 percent finished the year at 48 percent while an economy expected to grow by 3.5 percent shrunk by 2.7 percent, according to the World Bank -- if he manages to stabilize the economy, he has a chance.

Macri has a lot of ground to make up: his approval rating crashed from 66 percent in October 2017 to just 35 percent last month, according to a poll by the San Andres University.

A lot of people will need convincing that he could bring stability, and even prosperity, if afforded a second term in office.

"I think Argentines will choose the most extensive path: the one of efforts, truth, the long term, joint construction. We're tackling the enormous task of turning the corner on 70 years of taking shortcuts," wrote Macri in a New Year's message.

His aim is to slow down inflation to arrive at October's elections with a brighter outlook.

But "Macri needs to improve a lot of things and sort out many things," said Pablo Knopoff, director at Isonomia consultancy.

Something that might work in his favor is a divided Peronist opposition, which covers the entire left-to-right spectrum, making it difficult to unite behind a single candidate.

Its most popular politician is the center-left former president Cristina Kirchner, but she's facing several court cases over corruption.

- 'A fight between minorities' -

Nine months out from the election, there is no dominant front-runner and opinion polls suggest that whoever wins will have to form alliances with political opponents to prop up their government.

A poll published by Opinaia last week gave Macri 27 percent of voter intentions compared to Kirchner's 26 and 11 for her fellow Peronist Sergio Massa.

It's "a fight between minorities. The biggest group is the undecided," said sociologist Ricardo Rouvier.

"Whoever wins will have a minority and will have to negotiate with some other force."

There is still time for another option to gain momentum before August's primaries.

"Cristina Kirchner will be an important defining factor," says Knopoff, who believes her standing would benefit Macri.

Rouvier believes Kirchner could top the first round of voting ahead of Macri, but her rejection rating is so high that she would struggle to claim victory in the subsequent second round run-off.

Rouvier says that Macri and his Cambiemos ("Let's Change") alliance "don't have anything to offer in economic and social terms so they will run on other issues: security and the fight against corruption."

That will strike at Kirchner's solar plexus as the 65-year-old leader from 2007-15 is the subject of seven judicial investigations -- six of which are for corruption.

- Dollar 'safety net' -

Macri, though, has been beset by circumstances out of his control.

An unusually tough drought last year severely hit Argentina's main export: grain. And investment in bonds suffered from two dramatic currency drops that saw the peso lose more than half of its value against the dollar.

Macri's solution was to secure a $56 billion loan from the International Monetary Fund, an organization widely hated by Argentines, who have since been subjected to austerity measures demanded by the global financing institution in order to secure those funds.

But while the exchange rate has stabilized, Argentina, and indeed Macri, isn't out of the woods yet, because "in an election year, there is usually a dollarization of assets," said Lorenzo Sigaut, from consultants Ecolatina.

"There's huge uncertainty surrounding the exchange market," he said, adding that Argentines view the dollar "as a safety net," which was exactly the attitude that provoked the peso's 2018 problems.

Another currency fall would dump Argentina "into a critical situation, because you can't go back to the IMF" begging for more money.

With consumption and public investment expected to drop, "stagnation is the best case scenario for this year," said Sigaut.

And that spells trouble for Macri's re-election hopes.

Argentina's President Mauricio Macri faces an uphill battle in his bid for re-election