Argentina has elected a hard-right populist as president, a move that is likely to set off ripples across global financial markets, especially currencies, with his plans to ‘dollarize’ his country’s economy.
Argentinians elected Javier Milei as their new president on Sunday, taking a big punt that he will be able to fix an economy whacked by triple-digit inflation, a looming recession, and rising poverty.
Official results have not been released, but his rival, Peronist Economy Minister Sergio Massa, conceded in a speech. Reuters reported Monday morning, Australian time.
Massa’s candidacy was hampered by the country’s worst economic crisis in two decades, much of which had been caused by policies of his party’s predecessors while in power.
Milei is pledging economic shock therapy. His plans include shutting the central bank, ditching the peso, and slashing spending.
While those painful reforms resonated with younger voters angry at the country’s self-inflicted economic crisis, they nevertheless sparked fears of austerity in older voters who remember similar policies from right-wing governments in the past, especially the 1970s and the years of right-wing terror.
Whatever policy route he chooses, Milei’s challenges are enormous. He will have to deal with a government and central bank that’s broke, a $US44 billion ($A67 billion) debt program with the International Monetary Fund, inflation nearing 150%, and a myriad set of capital controls that have done nothing to help ease the economic pain.
Milei’s win will unsettle the political landscape and economic ties within Argentina and with the rest of the world.
He is outside both political groups in Argentina – the Peronistas who have fumbled the country’s riches off and on for decades and the conservatives – in a group for Sunday’s poll as the Together for Change, which were seen just as culpable as the Peronistas.
It could impact trade in grains (Argentina is a big producer of soybeans and corn as well as wheat), lithium, and hydrocarbons (Argentina has large shale oil and gas areas).
Reuters says Milei has criticized China and Brazil, saying he won’t deal with “communists,” and favors stronger US ties.
Argentina has the world’s second-largest lithium reserves, located in the Lithium Triangle, shared with Chile and Bolivia. It is the world’s fourth-largest lithium producer. Australia ranks ahead of it.
Austrade said in July that more than 20 Australian mining companies had interests in Argentina.
Australian lithium company, Allkem, will have a big interest in the election result as it moves towards a merger with Livent. Allkem has a major investment in producing brine-based lithium in Argentina. Allkem is actually based in Argentina.
Rio Tinto has more than a billion dollars in new investment planned for Argentina, where it is building a pilot plant for its huge Rincon lithium project.
Lake Resources has lithium plans in Argentina, as does Power Minerals, while BHP has several exploration areas.
Reuters reported that Milei is also staunchly anti-abortion, favors looser gun laws, and has called Argentine Pope Francis a socialist “son of a bitch.”