Argentina: Macri defuses Cristina’s bomb
Cristina Fernández de Kirchner has left a toxic legacy for newly elected president Mauricio Macri. Asset prices were buoyed by his election victory the mid-term outlook for the Argentine economy is brimming with potential, but he must get through the next six months unscathed and consolidate a weak political base.
Cristina Fernández de Kirchner blinks first, as president Mauricio Macri takes charge
“It’s like an atomic bomb – cut the wrong wire and… ” says Rodolfo Santangelo, one of the two founding partners of M&S Consultores – an economic consulting firm in Buenos Aires. He leaves the rest of simile hanging in the air, but the point is made: Macri is inheriting a dire situation and making reforms will be complicated.
The point is re-made again and again by members of Buenos Aires’ business community. Alejo Costa, Puente’s head of strategy, likens Macri’s task to a game of stack-crashing game Jenga: “Sequencing is important. Macri will have to be extremely precise about making movements, otherwise everything might collapse.”
The gloomy consensus about the next six months (tough and likely recessionary) is offset by the positive mid-term outlook (huge potential). Optimism rests on Argentina being a large, resource-blessed country with a skilled workforce and a balanced economy that has low leverage and that has been waiting for years for the right regulatory and financial environment to attract investment – both international and domestic.