Post-pandemic populism is even more unpredictable

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Post-pandemic populism is even more unpredictable

Eileen Gavin - 9 May 2022

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To Buenos Aires, where the first IMF review of its USD44 billion ‘extended EFF agreement’ with the Alberto Fernández administration has been brought forward to May (from June), amid concerns that inflation and other targets are already in need of recalibration.

The 2022 inflation ceiling target of 48% certainly seems a busted flush. With the CPI rate running hot at 52.3% year on year in February and 55.1% in March, economists are expecting it to hit 60% in due course.

The sharpening internal divisions inside the Fernández government between ‘moderates’ grouped around the president and his economy minister Martín Guzmán, and left-wing radicals loyal to the twice former president (2007-2015) and current VP Cristina Fernández de Kirchner - a fierce IMF critic who is mulling further presidential ambitions in 2023 – are not helping with policy efforts.

The late-March agreement with the Fund was a short-term exercise in ‘kicking the can down the road’ – for the umpteenth time in Argentina’s case - in the hope (on the Fund’s part) of a shift back to a ‘market-friendlier’ government in the 2023 general election.

However, this hope could be very misplaced, according to our Senior Americas Analyst, Mariano Machado, who warns that the cost-of-living crisis and the widespread public fury at the current crop of politicians could propel a radical populist outsider to the forefront in the 2023 campaign.

Even as inflation soars, confidence in the government collapses - falling to an eight-year low in April.

Machado warns that the October 2021 mid-term legislative elections reinforced a trend of extreme political polarisation in the country – which reflects post-pandemic trends elsewhere, from the Americas to South East Asia to Western Europe.

As angry voters gravitated back towards the hard-left of ‘Kirchnerism’ – in a protest vote against President Fernández - they also turned to right-wing libertarians such as deputy Javier Milei, a far-right economist and leader of a small, Trumpist-sounding party, La Libertad Avanza (Freedom Advances).

Milei, as yet undeclared for 2023, continues to rise up the polls, fuelled by his anti-establishment, anti-systemic discourse.

With the currency falling back and inflation continuing to bite, social protests against the status quo are all but guaranteed in coming months, and all the way to 2023.

Eileen Gavin

Principal Analyst, Global Markets & Americas

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