Colombia Heads to Election Runoff Between Leftist, Outsider

(Bloomberg) — Colombia is heading to a presidential runoff between leftist former guerrilla Gustavo Petro and anti-establishment outsider Rodolfo Hernandez who defied polls to defeat a conservative candidate backed by traditional parties.

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Petro received 40% of the votes Sunday against 28% for Hernandez, according to the electoral authorities. Federico Gutierrez, who was second in polls for months but saw his campaign stall in the final stretch, got 24%.

“Today, the country of dirty politics and corruption lost,” Hernandez said, speaking in an online video stream from his kitchen in the provincial city of Bucaramanga.

While Petro has been mayor of Bogota, senator and run for president before, Hernandez has less of a public track record and has been vague about what policies he would pursue if he wins. Polls showed Hernandez more competitive against Petro in a runoff, since Gutierrez supporters are now likely to transfer most of their votes to Hernandez.

“Rodolfo has a very good chance to unite voters, all those that want a change but not with the left,” said Silvana Amaya, an analyst at Control Risks consultancy in Bogota. “He has better chances of beating Petro in a runoff than any other candidate would have had.”

Colombian assets are likely to rally when markets reopen on Tuesday after a public holiday, said Andres Pardo, chief Latin America macro strategist at XP Investments in New York.

“Investors are mainly worried about the chance of a Petro victory, so they’ll view positively any scenario in which he doesn’t win,” Pardo said. “But the truth is that with Rodolfo Hernandez, there’s a huge question mark.”

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Hernandez, 77, made a fortune building homes for low-income families and was mayor of the northeastern city of Bucaramanga. He’s been compared to former US President Donald Trump for his brash and unpredictable style.

His campaign team built a successful social media strategy driven by TikTok videos espousing his simple message that Colombia is being bled white by corrupt politicians who should be in jail. He’s yet to say who would lead his economic team or provided specifics on key issues.

Petro, 62, wants to tax wealthy landowners, halt the awarding of oil exploration licenses and restore ties with the socialist government of Venezuela. He was a member of an illegal guerrilla group in his late teens and twenties before getting into politics.

The uncertainty over who will win the runoff, and a lack of clarity on Hernandez’s policies, are likely to keep investors on edge ahead of the June 19 vote. The new president will take office on Aug. 7.

Unemployment and Corruption

Colombian voters made clear their demand for change in the election by rejecting candidates supported by more traditional parties. While Colombia’s economy has rebounded strongly, the pandemic aggravated deep inequality in the South American country and voters are upset about issues including inflation, unemployment and corruption.

The next president will inherit an economy that is set to grow 5.8% this year, the fastest among major economies in the Americas, according to forecasts from the International Monetary Fund.

At the same time, inflation is running at a 21-year-high of 9.2%, led by a spike in food and energy costs which is particularly hitting poorer families.

“What becomes critical now is for Hernandez to start putting a team together and start naming possible cabinet members,” said Sergio Guzman, director of Colombia Risk Analysis, who thinks Hernandez will beat Petro “handily” in the runoff. “Most of Gutierrez’s backers will go for Rodolfo.”

(Adds comments from Hernandez in third paragraph.)

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