Magic's end

After Cristina, a more investor-friendly Argentina

No matter who wins the Argentine presidency in Sunday's election, Latin America's third-biggest economy will emerge more welcoming to investors than it has been under outgoing leftist leader Cristina Fernandez. To be fair, that's not saying much.

After years of interventionist policies, prickly nationalism and magical economic thinking, Argentina is in default on its sovereign debt and faces double-digit inflation, dwindling foreign reserves and a growing fiscal deficit. The International Monetary Fund (IMF) sees the economy growing just 0.4 per cent this year and shrinking 0.7 per cent in 2016.

Front-runner Daniel Scioli, the candidate of Fernandez's Front for Victory party and the governor of Buenos Aires province, is offering a more gradual fix for the nation's woes than his centre-right main rival Mauricio Macri, who favours more immediate shock therapy.

Scioli wins outright if he gains at least 40 per cent of the vote on Sunday and has a 10 percentage-point lead over Macri, as polls suggest may happen. Otherwise the two will face off on November 22, with Scioli again favoured to win. Sergio Massa, a former top Fernandez aide, is polling in third place with 20 per cent support but is unlikely to beat either rival into the run-off.

Scioli is ahead in part because he has been careful not to distance himself too far from Fernandez's popular social programmes, while intimating that he will be his own man once in power. Like Macri, Scioli is likely to seek a deal with hold-out creditors, dubbed "vultures" by Fernandez, who are suing the country over defaulted bonds, and he may have more chance than his rival of getting any agreement past a left-leaning Congress. A former vice-president of Argentina under Fernandez's late husband Nestor Kirchner, Scioli knows how to operate the levers of power, while Macri could face ideological gridlock. A deal would end Argentina's pariah status on global debt markets.

Business favourite Macri, the mayor of Buenos Aires, says he would quickly lift capital controls and let the peso float freely. Scioli, a former power boat champion who lost an arm in a 1989 crash, would rather proceed more gently but may be forced to devalue anyway. The Argentine currency hit a record low of 16.10 to the dollar on the black market earlier this week as investors bet on an upcoming devaluation, whichever government takes office in December. Unlike Fernandez, whose government was admonished by the IMF for rigging its economic data, Scioli would not be able to simply wish such harsh realities away.