With the election of Mauricio Macri as president, Argentina appears to have made a break with the past. But investors are likely to remain cautious for a while yet. Not since Argentina returned to democracy in 1983 has there been a president who was neither a Peronist nor from their close rivals the Radical Party.
On the face of it, Mr Macri's election brings an end to decades of poorly construed state intervention and excess, as well as less than optimal foreign policy. Mr Macri is pro-market and pragmatic, and as mayor of Buenos Aires was successful on improving infrastructure and developing poorer areas of the capital. As the person who ran the Boca Juniors football team and as a newly elected president his initial political authority and support will be strong.
But realistically, 30 years going in one direction cannot be countered quickly by a first step in a different direction. Exchange controls are expected to end and the currency will devalue but how much further Argentina will go in adapting itself to the real world – from which it has do often chosen to cut itself off – is difficult to gauge. Investors will take a long time to be convinced that the government has really changed its ways.
Brian Caplen is the editor of The Banker.
