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 Macri, the son of an Italian-born construction magnate, won the
election by tapping into frustration over anemic growth, high
inflation and corruption, and will become only the third
non-Peronist leader since the end of military rule in 1983.
The other two failed to finish their terms, however, a reminder of
the difficulties that Peronist labor unions, state governors and
opponents in Congress could cause Macri if he is unable to get the
economy growing quickly.
After an unpredictable campaign that pitted poorer Argentines
grateful for generous welfare programs against others exasperated
with state shackles on the economy, Macri will need to deliver on
pro-business reforms without hurting the poor.
"We've been saying from Tierra del Fuego in the south to Jujuy in
the north that we have to build an Argentina with zero poverty, and
that's what we're going to do together," Macri told his jubilant
supporters on Sunday night.
 Argentine sovereign debt rose on Monday on news of his election,
with the 2033 dollar discount bond hitting its highest level since
April 2007 <US040114GL81=R>. While Argentina's stock market was not
yet open for business, the Frankfurt-listed American Depository
Receipt of Argentina's Grupo Financiero Galicia <GGALyb.F> jumped
6.28 percent.
Macri defeated leftist ruling party candidate Daniel Scioli as
voters punished outgoing President Cristina Fernandez for her
handling of the economy and her abrasive style of leadership.
The 56 year old faces a number of economic challenges. Slow growth
is driven by unsustainable spending, inflation is at well above 20
percent and capital controls have backfired to leave foreign
reserves at nine-year lows.
The country is also mired in a messy debt default that is blocking
access to global credit markets.
Macri, who served two terms as mayor of Buenos Aires, has promised
to dismantle a web of currency controls and trade restrictions that
have deterred investors and hobbled growth.
Policy changes such as eliminating hefty taxes on grains exports and
revamping economic data long viewed as manipulated by Fernandez's
government will be quick hits to underscore his intent to bring
change.
But elsewhere he will have to move carefully.
Removing capital controls that have curbed access to dollars and
unifying a multi-tiered exchange rate may lead to a sharp
devaluation which, while needed to restore trade competitiveness,
will likely feed into consumer prices.
In the final stages of campaigning, Macri indicated he favored a
more staggered lifting of currency curbs.
"We cannot solve all the problems that this government is leaving
behind on the first day," Macri said ahead of the run-off vote on
Sunday.
He is expected to scale back energy and transport subsidies in his
first year in order to narrow a yawning fiscal deficit.
Economists estimate about 20 percent of government spending is on
subsidies, but weaning Argentines off cheap power and transport may
prove unpopular.
HARD TRANSITION AHEAD
"The transition from failed country to global power is likely to be
both bumpy and slow," said Roberto Lampl, Head of Latin American
Investments at Alquity Investment Management. "Macri will have to
undo twelve years of damage but looks set to prioritize the economy
and growth."
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"Today there is an optimism in Buenos Aires which hasn’t been seen
for over a decade, change has finally come to Argentina."
Scioli, a moderate Peronist, had the support of Fernandez loyalists
but he failed to convince others he would restore investor
confidence at a time when Argentina seeks to exploit vast shale oil
and gas reserves.
Even so, his warnings that Macri's pro-market policies will put the
interests of big business ahead of workers, erode salaries and
destroy pensions have laid down possible battle lines between Macri
and his opponents over the next four years.
"If Macri devalues then people could go out into the streets and
protest," said Scioli voter Ana Marchessi, a 56-year-old lawyer.
Macri's margin of victory was less than 3 percentage points and his
challenge will be to show an economic recovery is taking root by
late 2016 or he could face a hammering in a mid-term Congressional
elections the following year.
The past two non-Peronist leaders since democracy was restored in
1983 failed to complete their terms.
Both were from the Radical Party. Raul Alfonsin stepped down six
months early in 1989 as hyper-inflation raged, and Fernando de la
Rua fled the presidential palace in a helicopter during the 2001-02
depression.
Lacking a majority in Congress, Macri is likely to move quickly with
his reform agenda during an expected early honeymoon period and try
to draw on cross-party support.
He is expected to court the backing of lawmakers loyal to centrist
Sergio Massa, who placed third in the first round of the
presidential election last month, and other smaller parties to
outmaneuver Fernandez hardliners.
Control over discretionary transfers that boost provincial budgets,
meanwhile, will give Macri leverage over governors and in turn their
senators in the upper house.
His "Let's Change" alliance will control Argentina's three main
bases of power: the federal government, the populous Buenos Aires
province that traditionally was a Peronist stronghold, and the
capital city.
"This is a huge shift for Argentine politics," said Juan Cruz Diaz,
head of the Cefeidas Group.
"For years the opposition, controlled by an unsuccessful Radical
Party, claimed it was impossible to govern with Peronism in
opposition. Macri has a big opportunity to prove that wrong".
(Additional reporting by Sarah Marsh in Buenos Aires and Karin
Strohecker in London; Editing by Kieran Murray and Richard
Balmforth)
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