Macri surprises with vice-presidential pick
The surprise announcement put an end to weeks of speculation about Mr Macri's potential vice-presidential candidate and paves the way for the ruling coalition, Cambiemos, to increase its electoral reach. The move also puts Mr Macri back on the front foot after having been caught off-guard by the decision of his main opponent and former president, Cristina Fernández de Kirchner (2007-15), torun as vice-presidenton a ticket led by Alberto Fernández.
Having Mr Pichetto—previously the PJ Senate leader—on the ticket is expected to help Mr Macri capture that part of the traditional Peronist base that does not support MsFernández. Mr Pichetto has served as a Peronist lawmaker since 1993, and enjoys strong ties with the majority of Peronist provincial governors, whose support (even tacit) could prove extremely beneficial. At the same time, Mr Pichetto could help Mr Macri consolidate the latter's own conservative base. Mr Pichetto supports economic orthodoxy, a pragmatic foreign policy, hardlinesecurity policy and more restrictive immigration policy. Having Mr Pichetto firmly on Mr Macri's side also helps weaken the narrative that the Fernández-Fernández ticket represents a broad Peronist coalition and a move to the centre by Kirchnerism.
Mr Pichetto's inclusion on the ticket, however, did meet with some dissent: some members of Mr Macri's PRO party were concerned that the move could be perceived as a sign of weakness and that it could drive away anti-Peronist voters. However, this view was not shared by most factions within the ruling coalition, which had beenpushing for an expansion of the political alliance.
Markets reacted extremely positively to the June 11th announcement: Argentinean stocks rallied (with the Mervalindex rising by 5%), the five-year credit default swap rate fell (by 5%) and the peso strengthened (0.4%). Not only are investors more bullish on a Macri victory, they also believe policymaking and governability would improve under a second Macri administration. Mr Pichetto has voiced his support for structural reforms to the labour market, the tax code and the social security regime.
Impact on the forecast
Although risks persist given the state of the economy, the latest development reinforces our forecast for a Macri victory in the presidential race.