Goldman Sachs says the defeat endured by Argentina’s ruling coalition in Sunday’s primaries elections, known as PASO, may boost the probability of a regime change in the presidential elections scheduled for 2023.

In a note to investors, Latin America economist Alberto Ramos, says the market is likely to take a “net positive” view on the results as they “increase the probability of regime change in 2023 and more effective checks and balances until then.” The defeat of the ruling coalition Frente de Todos may also “mitigate the risk of more populist near-term policies.”

Newspaper La Nacion reported that the government lost 4.8 million votes vs the 2019 primaries while also losing the electoral race for Buenos Aires’ province, Argentina’s biggest and most important electoral district ruled by Axel Kicillof, a Peronist economist and politician. 

“Voters seem to have rejected the current policy mix, or at least the results of it: very high inflation, declining economic and wage growth, all amidst extensive controls and stifling financial repression,” Ramos wrote in the note.

“In the short-term there is the risk a slight shift to more heterodox, interventionist and populist policies in an attempt to rebuild political support, but the authorities are likely also aware that a significant hardening of heterodox policies could further damage the economy and therefore fail to pay political dividends in 2023,” he said.

The opposition Juntos por el Cambio coalition secured 40% of the overall vote, ahead of the 31% secured by the government coalition, Ramos said. The opposition won in 17 of the 23 provinces and in the autonomous city of Buenos Aires. In the 2019 presidential election the government got 48% of the vote and won in 19 of the 24 provinces, the report said.

Ramos sides with other analysts seeing the primaries as a preview or dry-run of the mid-term election on November 14 when half of the House and one-third of Senate seats will renew.