Argentina – Milei Presidente

Libertarian candidate Javier Milei will take power as president on December 10th after winning the presidential election by a wide margin . Milei won 56% of the vote to Peronist Finance Minister Sergio Massa's 44%. Milei has talked about reducing spending by 15% of GDP , privatizing state-owned companies , and dollarizing the economy to control inflation. The economy is in free fall as inflation remains extremely high and continues to accelerate . The combined effects of one of the worst droughts in history, economic mismanagement , and political uncertainty are taking their toll. The economy is in recession and will post an annual growth rate of around -3% YoY in 2023, with very strong headwinds in 2024 due to a likely contraction in public spending . It is likely that the parallel exchange rates will depreciate significantly. Before the second round of elections the Blue Dollar was at 869 and now it is around 950. It is very likely that it will continue to depreciate further in the coming days. In fact, we expect the exchange rate to depreciate sharply because dollarization will require a much weaker peso. It is also likely that the current government will have less interest in smoothing the transition until Milei takes power on December 10th.