Argentine economic morass will hit Macri's prospects

Significance

Although eight polling firms had given opposition candidate Alberto Fernandez an edge of 2-8 percentage points (pp) over Macri, the final result showed a difference of over 15 pp -- double that in some provinces. The market reaction has further undermined Macri’s options as he seeks re-election in October.

Impacts

• Macri may increasingly focus on becoming 'the first non-Peronist’ to finish his term since the return to democracy in 1983.
• The deal with the IMF will have to be renegotiated following the presidential handover if not before.
• The likelihood of a default has risen sharply regardless of the October election result.
• A key question for undecided voters will be how much independence Fernandez might enjoy from CFK and her entourage.
• Middle-class voters who opted for Macri in 2015 may defect to Lavagna as a protest against both leading candidates.