Ambiguity would seem the defining characteristic of the year ending tomorrow and it was fully expressed in the closing quarter. The electoral triumph in the year’s focal event, the October midterms, seemed to be making President Mauricio Macri’s re-election almost inevitable – not so much because of the 41 percent vote nationwide for his Cambiemos (Let’s Change) coalition as the apparently insoluble disarray of the opposition. But if such a small step toward structural reform as changing the mechanism for updating retirement and family benefits could trigger such a virulent backlash challenging a fragile institutional fabric, the way ahead would seem fraught with obstacles.
The outgoing year does not lend itself easily to any common denominator.
The first quarter was in many ways a continuation of a recessive 2016 with negative economic data (never official until INDEC statistics bureau resumed normal service in midyear) and low presidential popularity (with a Post Office scandal signposting various inherent conflicts of interest). On the very first day of the second quarter Macri atypically took control of the street with the “1-A” rally but teachers shunned any pay settlement throughout the quarter. The third quarter was dominated by a poor electoral campaign of uncertain outcome without control of the agenda (especially with Santiago Maldonado missing throughout August and September). A positive result in October, but then arrived the black swan of the missing ARA San Juan submarine in November and this month’s social protests. A busy year for courtrooms too with Kirchnerites not only going on trial but to jail, as well as the Alberto Nisman conundrum.
Tight monetary policy with high interest rates (Lebacs) and a laxer fiscal approach with lavish public works spending highlight the contradictions of economic policy.
A complex year even at this superficial glance – and an even deeper study would only multiply the complexities.
...and hello to 2018
The natural inclination for any forecast of an incoming year would be to look for early indicators of future trends on the domestic front – especially in years of even numbers when no elections are scheduled for the closing months – but 2018 might well be conditioned by developments later in the year and involving other countries.
The end of the year will see presidential elections in Brazil and midterms in the United States, for example. Our giant Mercosur partner is always a decisive factor and the US superpower even more so when this country is not locked into isolationism (that influence might well make itself felt earlier, depending on the evolution of the Federal Reserve’s monetary policy). And the year’s crowning moment is slated for right at the end with Argentina hosting the G20 summit – an event so crucial to Argentina’s bid to re-enter the world and for the government’s obsession with overseas investment (although President Mauricio Macri should stop spelling this out – those entrusted with chairing the G20 summit should be expected to live up to their global responsibilities).
A year free of electoral worries is not necessarily easier – elections complicate any government but also simplify its task because they remove any need to look further ahead. More than any of these first three years of the Macri administration, 2018 will be the year in which Cambiemos will be expected to live up to its “Let’s Change” name – lowering the fiscal deficit by a full point of gross domestic product without tax whitewash windfalls will already be difficult but serious structural reform with a continuing minority in Congress and dependence on a fickle Peronism looks even more uphill in the light of this month’s events. A record trade deficit topping US$7.5 billion will also need overdue attention.
But for now of course, 2018 is a clean slate with anything possible.