Despite a strong mandate, the country's first elected woman president is unlikely to veer far from the pro-growth policies pursued by Nestor Kirchner since he took office in 2003. However, while these policies helped to pull Argentina out of the severe economic crisis of 2001-02 and to generate Chinese-style growth, they have also created a series of distortions that Mrs Kirchner will be forced to address.

Mrs Kirchner, of the Frente para la Victoria (FV), an offshoot of the populist Peronist party, garnered 44.9% of the vote (with more than 96% of polling stations reporting), against 23% for leftist ex-congresswoman Elisa Carrió and 16.9% for Robert Lavagna, Mr Kirchner's former economy minister. Several other contenders registered only in the single digits.

To some extent, Mrs Kirchner road the coattails of her husband, whose popularity ratings stand at more than 60%. However, she is a skilled and popular politician in her own right, having served for years as a senator representing her home province of Santa Cruz, and more recently the province of Buenos Aires, the nation's largest.

Yet the popularity polls belie the problems that have been mounting for the Kirchner administration. These include an overheating economy, power shortages, fast-rising inflation and low private investment. Social tensions, particularly because of rising prices, have been manifest in protests both at the provincial level and earlier in October in the capital of Buenos Aires. Politically, some of Mr Kirchner's allies have also been defeated in recent local elections (including the capital district).

Incompatible policies

The rapid economic growth of the last five years' averaging more than 8% has been achieved thanks to robust prices and demand for Argentina's commodity exports, but also because of a series of interventionist and stimulative economic policies. These include strong fiscal spending, price accords and other measures to contain inflation, and a weak currency to further help the export sector.

However, current policy goals are largely incompatible: maintaining strong economic growth, holding on to the twin (fiscal and current-account) surpluses, keeping inflation at single-digit levels, maintaining a weak currency and minimising rises in interest rates. Changes will be needed if Argentina is to avoid a hard landing for the economy in the medium term.

Inflation is probably the problem that will hit the new administration first. Despite price constraints, inflationary pressures have been increasing, and real annual inflation is thought to be twice the official measure of 8.6%.

Yet Mrs Kirchner's plans for the next administration remain vague. She has said only that she will aim to forge a social pact between government, business and unions; will revisit how inflation is measured (to rebuild confidence in official data); and may gradually raise utility rates. By speaking at investors forums abroad, she has also raised expectations that she might address the issue of holdout creditors who did not participate in Argentina's massive 2002 debt restructuring. Failure to resolve the holdout problem will keep Argentina locked out of international credit markets.

Style over substance?

Specifics probably will only come after she selects her cabinet. Since she lacks administrative and executive experience of her own, her choices will be revealing of her likely policies, and should indicate whether they will amount to changes of substance, or only of style.

The Economist Intelligence Unit's baseline forecast assumes that a moderate shift in macroeconomic policy, including some tightening of monetary policy, will be made soon after the election, and will ensure a relatively smooth transition. But this is far from assured. And if the problems' particularly inflation and energy shortages worsen, Mrs Kirchner's current popularity and support base could quickly wear away.