What Mauricio Macri Means for Brazil

November 24, 2015 5:15 PM

In a presidential runoff on Sunday, Mauricio Macri of the opposition alliance Cambiemos became Argentina's new president, ending over a decade of so-called Kirchnerism. While opening up Argentina's economy and turning Kirchnerist economic policy on its head will be a major challenge for the president-elect, especially in view of the Peronist-dominated congress, his election victory is likely to reverberate strongly in neighboring Brazil, which is still mired in economic populism.

Macri has promised a complete overhaul of macroeconomic policies, emphasizing that Argentina's capital controls "are a mistake," that "there is no access to statistics," and that "the central bank has no independence." He has already called for the immediate resignation of Alejandro Vanoli, the head of Argentina's central bank.

Argentina's bad policies have resulted in fiscal chaos, rising inflation, and unemployment, undoing much of the promised social gains associated with economic populism. Growing, widespread fatigue with a failed economic model paved the way for the liberal-minded Macri to rise in the polls. If he gets Argentina's economy back on its feet, and is able to secure needed congressional approval for a deal with holdout creditors that allows the country to regain access to international capital markets, Brazilians will take notice.

Kirchnerism, a particular blend of Peronism—a mix of economic populism and aggressive institutional interventions, ranging from censoring the press to preventing access to the country's economic statistics—has undoubtedly been more destructive than Brazil's so-called Lulopetismo, where institutions have been largely preserved but corruption has run rampant and the economy is in disarray. That said, Brazilian president Dilma Rousseff's heavy-handed economic policies are much the same as Cristina Kirchner's recent track record.

Last year, President Rousseff was reelected in a similarly disputed runoff with Brazilian Social Democracy Party's Aecio Neves. Just as Macri in Argentina, Neves was seen as a clean break from years of economic populism, which have thrown Brazil's economy into its deepest recession in recent memory. Unlike in Argentina, however, at the time of Rousseff's reelection, unemployment was still at an all-time low, while inflation was somewhat contained. But since then, the country's Misery Index, a measure of well-being that adds up unemployment and inflation, has ballooned. If Macri succeeds in fixing Argentina's economy during his first term in office, he may inspire Brazilians to vote for change in 2018.

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Monica de Bolle Senior Research Staff

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