Argentina’s ex-President Nestor Kirchner is running for congress on a warning: the country risks economic chaos unless his party’s lawmakers can defend the policies of his wife, President Cristina Fernandez de Kirchner.
“We must remember, because moving back would be absolutely terrible for all of us,” Kirchner told supporters at a rally on June 4. Kirchner, who as president from 2003 to 2007 led Argentina out of its worst recession, said last month that opposition victory would mean “jobs will vanish, the poor will fall, a frightening past will return.”
While Argentina posted its slowest growth in the fourth quarter since 2002, opposition control of congress would make things worse, Kirchner says while campaigning. The government would lack the support it needs to intervene in the economy, such as last year’s nationalization of about $24 billion in pension funds, he says.
It’s unclear whether Kirchner’s tactics are working ahead of the June 28 election. Buenos Aires-based polling company Poliarquia Consultores, in a survey released on June 7 in La Nacion newspaper, showed Kirchner’s candidate list for the lower house trailing that of opposition leader Francisco de Narvaez, of the Union Pro party, by 3.1 percentage points. The poll has a margin of error of 2.9 percentage points.
Half the 257-seat lower house and a third of the 72-member Senate are up for grabs.
Consumer Spending
Stalling growth and a drop in consumer spending will probably cost Fernandez her lower house majority, Jorge Giacobbe of the Buenos Aires polling company Jorge Giacobbe & Asociados, said in an interview.
Still, the Buenos Aires-based Torcuato Di Tella University today reported that consumer confidence, which tracks purchasing plans as well as economic conditions, rose 1 percent in June from a year earlier and 2.4 percent from May to a reading of 40. During Kirchner’s presidency, the index reached a record 60.97.
The National Statistics Institute will report first-quarter gross domestic product on June 18 and the current account balance on June 19.
Argentina’s economy, South America’s second-biggest, will shrink 2.5 percent in the second quarter from a year earlier, Juan Pablo Fuentes, an economist at Moody’s Economy.com in West Chester, Pennsylvania, said in an interview.
It would be the first contraction since a 3.4 percent decline in GDP in the last quarter of 2002.
Riots, Looting
Kirchner reminds voters that in 2001, when Argentina defaulted on $95 billion of debt and restricted bank withdrawals, then-President Fernando de la Rua was forced to resign amid riots and supermarket lootings. The following year, the economy shrank almost 11 percent.
After Kirchner, 59, took office in May 2003, GDP expanded at least 8.5 percent a year. Unemployment fell to the lowest in 15 years, helped by rising commodity prices and exports after the previous government abandoned the peso’s one-to-one peg to the U.S. dollar.
Without her control of congress, Fernandez could be forced to cut agricultural export taxes and relinquish special powers to allocate spending, said Carola Sandy, an economist at Credit Suisse Group AG in New York.
“The most important thing that the government may lose is the blank check Congress handed over with the law of special powers,” said Sandy in a telephone interview. “With an opposition majority, lawmakers will have more control over spending.”
Markets Last Week
Last week, the yield on Argentina’s benchmark 8.28 percent dollar bonds due in 2033 declined 273 basis points, or 2.73 percentage points, to 14.903 percent, according to Bloomberg data. The bond’s price rose 9.9 cents to 54.9 cents on the dollar.
The Buenos Aires benchmark Merval stock index rose 1 percent to 1,654.56 points. Siderar SAIC (ERAR AF), the country’s biggest steelmaker, rose 9.7 percent, while Banco Patagonia SA (BPAT AF) fell 6.6 percent.
The following is a list of events in Argentina this week:
Technorati Profile
Event Date
Budget balance June 16 – 19
Consumer confidence June 16
Gross domestic product June 18
Current account balance June 19
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