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Argentina: It’s not just about the politics, stupid

Argentine president Cristina Kirchner’s growing unpopularity and health problems suggest she will not seek a third term of office in 2015. This raises uncertainties about economic reform. Why are Argentina’s bankers so optimistic?

On visiting Buenos Aires to research a Euromoney article about Argentina’s financial system, capital markets activity and macroeconomic environment, two things soon become clear. The first is that while people are happy – keen even – to take part in meetings, nearly all conversations have to be off the record.

The second, not unrelated, fact is that discussion about Argentina’s economy is the reverse of James Carville’s famous second bullet point in his succinct three-point strategy message that hung in the Little Rock headquarters of president Bill Clinton’s 1992 presidential election campaign: ‘The economy, stupid’. In Argentina, it’s politics that are central to understanding the economy.

Unfortunately, the politics are not easy to read. When, in October, the incumbent president, Cristina Kirchner, lost in the primaries of the parliamentary elections, asset prices jumped. The congressional elections, which were due to take place on October 27, will provide a clearer view of Kirchner’s presumed dwindling electoral appeal and therefore political base, but the prospect of a third term for the president – which would have necessitated a constitutional change to the current two-term limit – now seems remote.

"There is no more chance that [Kirchner] will continue in government after 2015," says the CEO of a local bank.

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