Peronists stage surprise comeback in Argentina

Argentina came closer to electing a new president on Sunday. In the first round of run-off elections, Peronist Economy Minister Sergio Massa defied expectations, clinching 36.7% of the vote to finish ahead of populist firebrand Javier Milei’s 30% and conservative candidate Patricia Bullrich’s 23.8%, with most ballots counted. The top two contenders will face off in a final round of voting on Nov. 19.

Pollsters had predicted the libertarian Milei would win on the first ballot, which required 45% of the vote or 40% with a 10% lead over the closest opponent. Massa’s Peronist party had taken much of the blame for the dismal state of Argentina's economy, where inflation has hit triple digits and two in five citizens live in poverty. Milei appealed to voters looking for change, preaching radical solutions like scrapping the peso, dollarizing the economy, abolishing the central bank, and cutting public spending by at least 15% of GDP.

But in the run-up to the vote, Massa rolled out some populist tactics of his own, granting welfare checks to workers, bonuses for retirees, and abolishing income taxes for 99% of the population. He also claimed that bus and train fares would rise sharply if he lost and emphasized the importance of Argentina's social safety net. Analysts say the institutional strength of the Peronist brand, as well as political polarization between left and right, helped explain Massa’s surprising comeback after his second-place finish to Milei in the August primary.

"It's amazing that the economy minister of an unpopular government with inflation accelerating to above 130% can be competitive," says Daniel Kerner, head of Eurasia Group's Latin America practice, noting that it "speaks to the strength of Peronism."

The eccentric Milei, meanwhile, cut a polarizing figure: The 53-year-old economist claims not to have brushed his hair since age 14, owns five cloned mastiffs, and wields a chainsaw at rallies. Massa and Bullrich criticized Milei for disparaging the country and advancing “bad and dangerous ideas,” perhaps influencing more voters to stick with the status quo than opt for the unknown.

After ballots were counted, Massa talked about “building a government of national unity,” “free education,” and promising “more order, and to build clear rules.”

Milei's Sunday night speech was described as “conciliatory.” “We can’t keep destroying ourselves with kircherismo," he says. "For everyone who wants change, we’ll need to work together.”

Financial analysts say Massa’s first-place showing rules out a sharp devaluation of the official exchange rate in the short term, though markets could still see turmoil. Between now and the Nov. 19 runoff, “we’re going to continue seeing high inflation and pressure on the exchange rate, but we’re not going to see a full-blown currency crisis and hyperinflation, that’s ruled out,” said Martin Rapetti, executive director of Buenos Aires-based consulting firm Equilibra.

But markets could still be in for a wild ride in November, should Milei pull off a win. The big question now is whether Milei can woo Bullrich's voters in the second round. "Most [of them] will vote for Milei," says Kerner, "but not all of them. Milei is too radical for some, and Massa will try to appeal to them," he adds, noting that he expects a very tight race to the finish.