Mariano Flores Vidal, from the consulting firm Hyperion: “The electorate chose hope and a different path for the economy”

The result of last Sunday’s elections showed that the improvement of the socioeconomic reality – manifested in previous surveys on consumer confidence in general and in the Government in particular -, the average improvement in salaries that is reflected in the collection of contributions and contributions to the Anses, together with the performance of the macroeconomy – particularly in the fiscal, monetary and inflation flanks – weighed more on the voters’ decision than the concerns of the “market” and a set of economists by only two variables: real exchange rate and floating bands without intervention, because – in the opinion of some – they prevent the accumulation of reserves and the recreation of the confidence of potential investors.

With that painting, Infobae interviewed Mariano Flores Vidaleconomist, consultant, former general manager of the Central Bank and director of Hyperion Consultores, to learn his view on the result of the legislative elections and his expectations for the second half of the presidential term of Javier Milei.

—From a socioeconomic point of view, how did you read the result of last Sunday’s elections?

— When an administration like the current one clearly and vehemently communicates the direction it wants for the country, in all areas, both economic and social, and puts it into practice without hesitation, and that direction is diametrically opposed to the one that has been implemented in Argentina in the last 25 years (with some exceptions) and to that proposed by the rest of the parties, the only possible reading in the face of the broad victory in the legislative elections is that the people cling to that direction and, with their vote, granted it the necessary resources to advance the proposed reforms.

In short, I see it as strong support for the direction set by Javier Milei. This support does not necessarily imply absolute conviction: many may have supported it to avoid returning to the same old thing.

—Were “the markets” wrong who anticipated governance difficulties for the second half of the Milei government?

— Clearly the markets and all the analysts were wrong. The most risky spoke that the LLA could win by one or two points, while the majority expected adverse results, speculating how much the fourteen point difference in the September election in the province of Buenos Aires would be reduced. It was a Black Swan for everyone.

The course proposed by the Government requires a lot of governability, that is, broad support. The economic stagnation that has been observed since the first quarter of this year, in my opinion, is due to the lack of credibility in the political viability of the changes, in the face of an opposition that, upon perceiving this situation, began to show resistance and attack the Fiscal Surplus.

This was what the market read, which generated exchange pressure due to doubts about the possibility of carrying out the necessary reforms to increase the country’s productivity. Under these conditions, the exchange rate achieved could not be considered equilibrium, requiring a more depreciated value and generating doubts about the exchange bands. After the election result of September 6, the end of the brief period of radical change in Argentina seemed imminent.

— According to your analysis, did consumers vote for the current economy, the change compared to previous years, or for fear of returning to populist practices that provide only monetary illusions?

—I think there was a little of everything. The social order was valued – fewer pickets, for example – and the drop in inflation, but there is a large majority who voted with hope, trusting that doing things differently will allow them to see real improvements for themselves and their children, even though today they are facing a cost while waiting for future fruits. In short, they are two sides of the same coin: many voted not to return to past practices because they see no future in that path.

— Is the financial and commercial support that Argentina received from the United States government an asset or a liability?

—It is clearly an asset. Any developing country wants the support of a world power. In international politics, Argentina must maintain a clear position to seek aligned partners. Neutral positions never achieved stable relations, neither with one nor with the other.

Currently, the United States is already the main investor in the Argentine private sector, representing 17% of direct investment in the country, while China adds only 2.3%. There is great interest from the United States in expanding investments, especially in energy and mining.

In trade in goods, our bilateral relationship is balanced—not in deficit—but the volume is low, barely 9.0% of our total trade, while China represents 12%, although with a higher proportion of imports. In terms of exports, both are even. With new trade agreements, trade with the United States could have a strong boost.

—What did you think of the President’s first message after the elections to renew the legislative chambers?

— It was a timely speech for the upcoming period, in which the will and ability of the Executive is required to achieve consensus in Congress and sanction second-order reforms.

In that message, the President surprised with a calmer tone and by calling for rapprochement with the non-Kirchnerist opposition blocs. Let us remember that, in Deputies, between LLA and PRO there are one hundred and seven, when the quorum requires one hundred and twenty-nine, and in Senators there are twenty-three of the thirty-seven necessary. Both figures can be achieved with the non-K opposition, but they require negotiation skills, an unusual exercise until now.

—Will the market reaction after the elections generate more “poverty effect” in those who sought coverage in dollars or “wealth effect” in those who maintained assets in pesos?

— The lower exchange rate pressure, the drop in the country risk index and the normalization of interest rates will generate a wealth effect both for those who bet on instruments in pesos or stocks, and for those who opted for securities in dollars. The only ones harmed were those who took a “long” position in dollars (futures) without coverage. This was evident the following Monday, when the dollar fell to $1,340 due to the dismantling of positions.

—Will the election result lead to revising the economic forecasts for the remainder of the year and 2026: exchange rate, inflation, activity and consumption?

– Absolutely. Once the electoral uncertainty has been cleared up and with a result favorable to the Government’s course, the macroeconomic perspectives are much clearer. We hope:

1. a significant drop in interest rates; Badlar, which was at 50% TNA before the election, could close the year at 34% TNA or less;
2. he exchange rate we estimate it close to the upper band at $1,520 at the end of the year;
3. The inflation it would continue close to 2% monthly, with an annual rate of around 29 percent;
4. In activityafter a drop of 0.4%/0.5% in the third quarter, we foresee a rebound in the last quarter of the year, of 0.8%, concentrated in the final two months, driven by a record wheat harvest, better expectations and lower interest rates.

By 2026, at Hyperion we project:

1. he GDP growth will strengthen, reaching 5.6% end to end (annual average of 3.8%), hand in hand with a harvest that will increase 10% and a strong investment recovery (foreign and local), which, added to greater credit, will lead to a recovery in private consumption.
2. In it monetary and exchange rateit is expected to abandon the exchange bands at the beginning of 2026, moving towards a smoothly managed float. The exchange rate would end at $1,806, with a depreciation of 19%, very similar to the inflation of the period (20%), so the real exchange rate would remain constant; at today’s prices, the multilateral real exchange rate At the end of 2026 it would be 1,450 per dollar.
3. The interest rates They would continue to decline during 2026, with fixed terms reaching 21% TNA in December.

Photos: Maximiliano Luna