Argentina will face high inflation and deteriorating living conditions in 2024 regardless of who wins the presidential runoff, though a victory by the libertarian candidate would generate greater political and economic volatility, along with a higher prospect of pro-business policies, than a victory by his progressive rival. Argentina will hold the second round of its presidential election on Nov. 19, when progressive Economy Minister Sergio Massa will run against libertarian candidate Javier Milei. The winner will take over on Dec. 10 for a four-year term. The election will take place against the backdrop of a deep economic crisis, as inflation reached 142% year-on-year in October while the local currency, the peso, keeps losing ground to the U.S. dollar in informal markets amid record low reserves in the Central Bank and a generalized mistrust in the government's ability to turn things around. Meanwhile, the International Monetary Fund (IMF) expects the Argentine economy to contract by 2.5% in 2023.

• The first round of the presidential election took place on Oct. 22, when Massa secured 37% of the vote to Milei's 30%. On Oct. 23, Conservative candidate Patricia Bullrich, who came in third with 24% of the vote, expressed her support for Milei, though her Together for Change party is internally divided on the issue and some members have said they will remain neutral in the runoff election. 
• Opinion polls for the runoff election suggest that the race will be tight, as some polls predict Milei's victory while others claim that Massa will win. Polls proved to be highly inaccurate in their predictions for the primary elections in August and the first round in October. 

Regardless of the winner, in the short term Argentina's next president will face very high inflation levels amid deteriorating living standards, though in the medium-to-long term, increased agricultural exports and improved energy security should bring in much-needed dollars. In recent months, Massa has used his role as economy minister to increase public spending to improve his chances of winning the presidential election. This included one-off payments for retirees, the unemployed and workers in the private and public sectors, as well as tax cuts for the self-employed and small- and medium-sized businesses. These expansionary fiscal policies will have a lagging effect on inflation, which means that the massive amounts of pesos that the outgoing government injected into the economy in recent months will result in very high levels of inflation in 2024 regardless of the winner of the presidential election. As a result, Argentina will face high levels of economic uncertainty that will negatively affect investment and spending decisions by households and businesses. This deterioration in living standards will spur frequent protests throughout the year. However, two factors should bring in much-needed hard currency in the medium-to-long term and strengthen the government's fiscal position. The first is that agricultural exports should improve. In 2022 and 2023, Argentina's worst drought in six decades dramatically reduced agricultural exports, which are a significant source of U.S. dollars and state revenue for the country. As the drought is expected to recede in 2024, Argentina's exports will probably increase — and with it, the availability of hard currency, as well as state revenue. The second factor is a progressive reduction in energy imports. In mid-2023, Argentina inaugurated the first stage of a pipeline that will carry natural gas from the Vaca Muerta shale formation in Patagonia to the industrial heartland in the central Buenos Aires and Santa Fe provinces (the second stage, scheduled for late 2024, will take the pipeline to the north of the country and connect it to Bolivia). This will reduce Argentina's imports of natural gas and save the country billions of dollars in energy imports, which will also result in greater availability of hard currency. 

• Argentina is a major global exporter of agricultural products, and agricultural exports are one of the country's main sources of U.S. dollars. Because of the drought, during the first six months of 2023, Argentina's agricultural exports were 35% lower (in dollar terms) than during the same period in 2022. According to a report by the agricultural association CREA, Argentina's agricultural export revenues will fall by $20 billion in 2023 due to the drought. 
• According to the Argentine government, the new natural gas pipeline will save the country $1.7 billion in imports in 2023 alone, with higher savings expected for 2024. The Argentine government has expressed ambitions to eventually export natural gas to Brazil and Uruguay. 

Massa's victory would reduce the risk of political instability and heightened social unrest, but it would also mean a continuation of heavy state intervention in Argentina's economy and high levels of inflation. A Massa government would probably be politically stable, as his Union for the Homeland party secured 34 of the 72 seats in the Senate and 109 of the 257 seats in the Chamber of Deputies in the concurrent legislative elections held on Oct. 22. This means that the party will only need support from a handful of opposition Senators and Deputies to pass legislation, something that will probably be easy as the opposition will be fragmented and some lawmakers will be willing to support the government in exchange for minor policy concessions. Massa's victory would also reduce the probability of large episodes of social unrest because of the Union for the Homeland's close association with union leaders and groups representing unemployed and low-income Argentines. This means that there will be a low risk of general strikes, while anti-government protests by social organizations will remain small and localized, producing only temporary disruptions in the movement of goods and people. On the flip side, Massa would be unlikely to introduce pro-business reforms to severely deregulate the economy and lower costs for businesses. Under pressure from the IMF, a Massa presidency would seek to reduce Argentina's fiscal deficit, but this would happen slowly, as the new president would prioritize the continuation of welfare policies and subsidies that benefit his voter base. This means that a Massa administration would likely experience high levels of inflation connected to high levels of fiscal spending and keep capital controls in place, at least in the short term. A Massa government would also be likely to further devalue the peso shortly after taking over to compensate for the lack of U.S. dollars in the central bank, which could help exporters but would also further erode households' purchasing power.

• Massa has promised to reduce Argentina's fiscal deficit from the current 2% of GDP to 1% of GDP by the end of 2024, and seek a fiscal surplus starting in 2025. As a part of this promise, he has pledged to replace many of the current welfare programs (which many Argentines receive for unlimited periods) with time-limited unemployment benefits that incentivize people to look for jobs. However, he has not said when or to what extent the existing welfare programs would be phased out if he's elected. Massa has also pledged to preserve existing subsidies on public transportation. Several sectors of the Union for the Homeland party would oppose a significant reduction in welfare programs and subsidies, on which a significant portion of the party's electorate depends.
• Additionally, Massa has pledged to seek new markets for Argentina's agricultural and manufactured exports and to sign trade agreements around the world, but he has not given any details about his priorities. He has also promised to keep close political and economic ties with Brazil and China, two of Argentina's main export destinations, and to strengthen the Southern Common Market (Mercosur). This contrasts with Milei, who has pledged to reduce Argentina's political and economic ties with left-wing governments, exit Mercosur, and deepen political and economic ties with the United States. 

Milei's victory would increase the risk of widespread social unrest and economic volatility in the short term, but if he manages to stay in power, his pro-market policies could attract additional domestic and foreign investment in the medium-to-long term. A Milei government would be inherently weak because his Liberty Advances party only secured eight seats in the Senate and 38 seats in the Chamber of Deputies in the Oct. 22 election, which will make it impossible for the party to pass legislation on its own. While some members of Together for Change would likely support Milei's agenda, the conservative party is internally divided and it's not a given that enough of its members would back a Milei administration. Moreover, Liberty Advances does not control any of Argentina's provinces, which would undermine the local implementation of Milei's policies. Additionally, Milei's pledge to severely reduce public spending on healthcare, education, infrastructure and welfare would almost immediately trigger protests if he becomes president. The most destabilizing of Milei's proposals is his plan to replace the Argentine peso with the U.S. dollar. While Milei has been vague about how quickly he'd implement this plan, the mere prospect of dollarization could trigger a run on Argentina's banks if he's elected on Nov. 19 by prompting savers to withdraw their pesos and purchase dollars in informal markets for fear that the eventual dollarization would happen at a higher exchange rate than currently. This would force the government to impose a bank holiday to freeze bank accounts and stop the run. Such a bank run could even happen before Milei's Dec. 10 inauguration if households and businesses fear that he'll compulsively pursue dollarization shortly after taking office. However, should Milei's government survive what would almost certainly be a very tumultuous first few months, his pro-business, de-regulation agenda could create significant opportunities for local and foreign investors. 

• If elected president, Milei has pledged to drastically reduce public spending in most areas of the Argentine economy and allow private businesses to become the dominant players in activities ranging from education and healthcare to infrastructure and pensions. He has also promised that this severe reduction in public spending would be accompanied by drastic tax cuts for households and businesses.
• Should Milei lose the Nov. 19 election by a very narrow margin, some of his supporters may denounce fraud and take to the streets in protest. This could result in sporadic acts of violence and clashes with the police shortly after the election.