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Argentina’s Peronist Economy Minister Sergio Massa has won a surprise victory over libertarian challenger Javier Milei in the first round of presidential elections, setting up a polarizing runoff next month amid growing economic turmoil.
With 98.5 percent of votes counted, Massa of the country’s center-left ruling coalition had won 36.7 percent, compared to 30 percent for Milei’s La Libertad Avanza (LLA) party. Massa and Milei will compete in a runoff election on November 19th.
Few had believed that Massa could engineer an electoral victory despite triple-digit inflation and growing poverty, as the Peronists came third in the national primary in August. But the political veteran ran an effective campaign that exuded moderation and raised fears among voters about the impact of Milei’s radical plans to shrink the state.
Sunday night’s result overturned almost all opinion polls that had shown a consistent lead for Milei, a shaggy-haired economist and television host who took first place in August.
Patricia Bullrich, the candidate favored by many investors and business leaders from the mainstream center-right opposition bloc Juntos por el Cambio (JxC), was eliminated with just 23.8 percent. JxC, once the favorite, suffered from a contentious primary and a campaign focused more on law and order than the economy.
In his victory speech, Massa reiterated his election promise to form a unity government with various political parties and promised to end the divide between Peronists and non-Peronists that has dominated Argentine politics for 40 years. “I am someone who believes in dialogue and consensus,” he said.
Milei acknowledged the election results and called on “everyone who wants change” in Argentina to defeat Peronism. “I’m ready to have a clean slate. . . Beyond all our differences, we must understand that we have a criminal enemy against us.”
138% Argentina’s annual inflation rate in September
Massa, a pragmatic dealmaker from the right-wing Peronist movement, has observed a rapidly deteriorating economic climate over the past 14 months under outgoing President Alberto Fernández. Inflation reached 138 percent annually in September as Argentina’s foreign reserves were depleted to support the falling peso.
Despite the deteriorating economy, Massa increased social spending and announced tax breaks during the election campaign. In doing so, he contrasted his determination to maintain Argentina’s social safety nets with Milei’s promise to reduce the number of ministries.
“In the weeks ending Sunday, November 19, the government is expected to continue pulling rabbits out of hats to muddle through and prevent a disorderly devaluation,” Diego Pereira and colleagues at JPMorgan said in a note. “Continuing lax fiscal policy until the runoff election would only increase the extent of the imbalances that need to be corrected after the presidential election.”
Milei’s insurgent bid for the presidency was fueled by widespread frustration in Argentina after several decades of economic problems.
He waged a furious campaign against mismanagement and corruption by Argentina’s political establishment, while promising to cut spending by up to 15 percent of gross domestic product and introduce U.S. currency. He also opposed abortion, denied climate change and attacked Argentine-born Pope Francis, a former archbishop of Buenos Aires, as a “dirty leftist” and “idiot.”
None of next month’s second-round candidates will have a majority in Argentina’s Congress. Projections from the congressional vote showed that the Peronists will have 108 seats in the lower house, 21 of which they lack a majority, JxC 93, Milei’s party 37 and the rest going to small blocs. In the Senate, where a third of the 72 seats were up for grabs, the Peronists will have 34 seats, JxC will have 24 and LLA will have eight.
Massa’s national victory was largely thanks to a strong performance by the Peronists in Buenos Aires province, where more than a third of Argentines live. Incumbent Axel Kicillof, an ally of the former Peronist president and current vice president Cristina Fernández de Kirchner, triumphed there in the gubernatorial race with 44.9 percent, well ahead of JxC with 26.6 percent.
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While markets are unsettled by Milei’s plans to overhaul the economy, the Peronists’ strong performance could have an impact on Argentina’s already struggling government bonds, said Martín Rapetti, managing director of economic consultancy Equilibria.
“Massa promises much better governance than Milei, but the market consensus has doubts about whether Massa really wants or can carry out the reforms Argentina needs,” he said.