Argentina Elections: Massa Surprises and Will Dispute a Tight Run-off with Milei
Surprising election results in Argentina on Oct 22 saw Sergio Massa securing 37% of the votes, setting up a runoff against Javier Milei on Nov 19. Milei's victory prospects have diminished, as potential shifts in support from Bullrich to Massa loom. With a 60% chance of Massa winning, navigating through Congress hurdles remains pivotal, especially for Milei, given his limited party seats. Both contenders must prioritize curbing inflation and enhancing FX reserves, while Milei's immediate dollarization proposal faces short-term viability issues.
Figure 1: Votes for President (%)
Source: La Nacion
On October 22, Argentina held its elections, yielding surprising results. Sergio Massa secured 37% of the votes, marking a significant 9-percentage-point increase from the national primaries, where he had gathered 28% support. The far-right candidate, Javier Milei, followed closely with 30% of the votes, experiencing a slight drop from the 31% attained in the primaries. Patricia Bullrich clinched the third position with 23% support, while the remaining candidates collectively garnered 9.7%. Consequently, a runoff between Sergio Massa and Javier Milei has been scheduled for Nov. 19.
In light of these results, Javier Milei no longer appears to be the favoured candidate for victory. The two trailing candidates, Juan Schiaretti, a center-left contender sharing similarities with Massa, and Myriam Bergmam, a far-left candidate, are both poised to potentially throw their weight behind Massa. The pivotal question remains: to what extent can Milei sway Bullrich's supporters? Converting approximately 90% of her voters seems imperative for his electoral success. Notably, while many of Bullrich's supporters lean towards a change in government, some might not align entirely with Milei's radical stances and those candidates could swing to Massa. The task of Massa will be to convert around 3% of the 23% Bullrich gathered. All in all, the scenario points to a tight race between both candidates.
Figure 2: Seats in the Chamber of Deputies (Total Seats = 257)
Source: La Nacion
Currently, we assess a 60% likelihood of a victory for Massa and a 40% chance for Milei. Considering the distribution of Congress, the winning candidate will encounter challenges in passing new legislation, as neither faction has managed to secure a majority. However, Milei may face heightened obstacles, given that his party, La Libertad Avanza, has only secured 27 seats in the Chamber of Deputies and 8 in the Senate. This suggests significant institutional hurdles during his tenure, particularly in implementing proposed drastic changes like dollarization and the closing of the Central Bank.
Figure 3: Seats in the Senate (Total Seats = 72)
Source: La Nacion
Regardless of the election outcome, the victor must prioritize efforts to curb Argentina's skyrocketing inflation and bolster its dwindling FX reserves. Currently, detailed plans from both candidates regarding the reduction of the fiscal deficit and monetary financing from the Central Bank are limited. Additionally, Milei's proposal for immediate dollarization appears unviable, at least in the short-term as Argentina would need to reduce its current account deficit and accumulate a higher level of FX reserves first.