The World Briefly

November 21, 2023

Hold Tight

Argentina

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Libertarian Javier Milei won Argentina’s presidential runoff Sunday by a landslide, a victory that could cause a major shake-up in the South American country’s economy amid soaring inflation and rising poverty, CBS News reported.

With nearly all the votes counted, Milei secured almost 56 percent of the vote, defeating his Peronist rival, the Economy Minister Sergio Massa, who conceded after receiving a little more than 44 percent.

Milei came in second during last month’s first round of voting.

His victory will swing the country to the right, with analysts noting that the election’s outcome also underscores public discontent with the current government over economic woes.

Self-described as an “anarcho-capitalist,” Milei vowed to reduce inflation, dollarize the Argentine economy and abolish the country’s central bank.

Massa’s campaign focused on warning voters about the dangers of his opponent’s policies, saying they would threaten public services and welfare programs many people rely on. Milei accused the minister and his allies of fear-mongering, while he also walked back on some of his divisive policies, such as loosening gun control and privatizing healthcare.

Even so, many analysts told CNBC that the shock result leaves Latin America’s third-largest economy in uncharted territory.

They noted that the president-elect will inherit a country with a deep economic crisis.

The South American nation’s purchasing power has been severely impacted by an annual inflation rate exceeding 140 percent. Around 40 percent of Argentines now reside in poverty, and crucial agricultural regions are grappling with an unprecedented drought.

Dollarizing the economy would mean Argentina would drop its own currency, the peso, and use the US dollar. Supporters of the plan believe that changing the currency could help Argentina manage high inflation and stabilize its economy. However, opponents counter that such a move would take away the country’s control over its own economic decisions, including managing interest rates.

Jimena Blanco, the head of Americas at Verisk Maplecroft, noted that significant structural reforms are necessary for Milei to fulfill his promises. She cautioned that the immediate implementation of dollarization is unlikely because of the lack of US dollars in the country’s central bank.

This story originally appeared in the November 21, 2023 newsletter, Prelude and Epilogue to War.