Argentina's Presidential Election Results Are In: Now What?

On October 28, Argentina made its decision: Alberto Fernández is headed to the Casa Rosada, after defeating incumbent Mauricio Macri with 48 percent of the vote. Though the election was unexpectedly competitive, Peronism has reestablished control over the country. For his part, Mr. Macri joins a small list of Latin American leaders who have lost reelection; only two incumbents have been voted out of office since 1990, Hipólito Mejía in the Dominican Republic in 2004, and Daniel Ortega in Nicaragua in 1990.

Why did Mr. Macri join this unfortunate club? As is typical worldwide, the biggest issue for Argentine voters was the economy. Although Argentina is no stranger to economic stagnation, the recent economic crisis has taken a particularly harsh toll – and it produced an insurmountable voto castigo for Mr. Macri.

However, despite the disappointing results for Mr. Macri’s center-right coalition, the president will still make history, becoming only the third non-Peronist president to complete his term since 1912, the year Argentina democratized. Indeed, Argentina’s election – with new campaign finance rules, presidential debates, transparent vote tallying, and an orderly transition – has demonstrated an impressive “culture of democracy,” George Washington University Prof. Paula Alonso said at a recent round table in Washington, co-sponsored by the Wilson Center and the Johns Hopkins University School of Advanced International Studies.

After all, only four years ago, the transition between the Fernández de Kirchner and Macri administrations devolved into a bitter dispute over the location of the handover ceremony, which Cristina Fernández de Kirchner ultimately boycotted.

This time around, there has been a refreshing air of maturity. Mr. Macri hosted the president-elect for breakfast the morning after the election, sending a reassuring signal to international onlookers that cooperation between the future government and future opposition might be possible. That is not a minor issue; though Juntos por el Cambio lost the presidency and the governorship in the Buenos Aires, it will control more seats in Argentina’s lower house than Mr. Fernández’s Frente de Todos, and it retained control over City Hall in the country’s capital.

The market reaction was mild, especially compared to the panic that followed the August primary, when Mr. Fernández’s strong performance provoked a currency crisis. Meanwhile, Argentina’s key international partners have sent reassuring messages. The new International Monetary Fund managing director, Kristalina Georgieva, tweeted her congratulations to Mr. Fernández, and said the IMF “looks forward to engaging with his administration to tackle Argentina’s economic challenges and promote inclusive and sustainable growth.” President Donald Trump spoke by phone with Mr. Fernández, and a White House readout of the call said Mr. Trump had expressed his “desire to continue positive bilateral cooperation, especially with respect to security, democracy and economic development.”

However, even amid the enthusiasm over Argentine democracy – an outlier in a region beset by public protest in recent months – there is widespread recognition Mr. Fernández faces an uphill battle to improve Argentina’s gloomy economic conditions.

Poverty levels exceed 35 percent, and unemployment stands at 10 percent. The economy has been relatively stable since the election, thanks in part to the central bank’s decision to impose highly restrictive capital controls. But Argentina remains vulnerable to external shocks or abrupt policy changes, including to its monetary policy, and it faces daunting debt renegotiations that could deprive Mr. Fernández of the typical honeymoon new presidents enjoy.

For now, given Mr. Fernández’s reluctance to announce public policy ideas, or even cabinet appointments, observers are largely reserving judgment about his capacity to steer Argentina through its latest economic crisis. There is still cautious optimism he will govern as a moderate, and limit the influence of his populist vice president, Ms. Fernández de Kirchner.

If that is the case, there might be modest tailwinds for Argentina’s new government. After all, some of the factors that generated excitement over Mr. Macri’s election – including Argentina’s enormous unconventional oil and gas resources – will be unaffected by the political transition. Moreover, despite the high debt, Mr. Fernández will inherit an economy on relatively strong footing, Martin Rapetti, the economic development director of the Argentine policy research organization CIPPEC, said at a recent Wilson Center seminar.

Argentina’s current account will be in surplus in 2020, and its budget deficit will be dramatically lower than during the Fernández de Kirchner years, Mr. Rapetti said. “I am not trying to paint a rosy picture,” he said, “I am just trying to reduce panic.”