Oct. 29 (Bloomberg) -- Argentina's first lady, Cristina Fernandez de Kirchner, swept to victory in yesterday's presidential election, becoming the country's first woman to be voted into the office.

Fernandez, a 54-year-old senator, told jubilant supporters in Buenos Aires she'll continue the policies of her husband, Nestor Kirchner, who oversaw 9 percent economic growth and a tumbling unemployment rate since taking power in 2003. Fernandez and her running mate, Mendoza province governor Julio Cobos, 52, start their four-year term on Dec. 10.

``Since 2003 we've fought poverty, unemployment and the things that caused so much damage and brought so much tragedy to the Argentine people,'' Fernandez said with her husband by her side. ``We're going to construct a different history.''

Fernandez gave few details during the campaign about how she will manage the country's economy, never holding a news conference or issuing a platform. Economists and pollsters, such as Buenos Aires-based Felipe Noguera, say inflation, energy shortages and government-backed price controls threaten to undermine her promises to ``deepen'' Kirchner's achievements.

45 Percent Win

``Cristina's implicit mandate is to keep the good times rolling,'' said Noguera, who owns Felipe Noguera Consultores. ``But in light of energy shortages, inflation and low investment in the economy, the big question is whether she'll be able to deliver on that mandate.''

With 96.5 percent of polling stations reporting, Fernandez had 44.9 percent of the vote. Ex-congresswoman Elisa Carrio conceded defeat after finishing second with 23 percent. Former Economy Minister Roberto Lavagna was third with 16.9 percent.

Under Argentine law, a candidate can win the election and avoid a runoff by garnering 40 percent of the ballots and a 10 percentage point lead over the nearest competitor.

The yield on Argentina's 5.83 percent inflation-linked peso bond due December 2033 fell to 7.60 percent from 7.68 percent today, according to Citibank Argentina. The country's benchmark inflation-linked bonds have tumbled 24 percent this year, making Argentina's debt market the worst performer in the world, according to data compiled by JPMorgan Chase & Co. and Bloomberg.

The peso rose to 3.156 pesos per dollar from 3.171 pesos per dollar yesterday, the biggest change since Aug. 8.

More Jobs

Fernandez repeatedly emphasized the contrast between conditions today and after Argentina's financial crisis in 2001 and 2002, when the country defaulted on $95 billion of bonds and the peso lost 70 percent of its value against the dollar. She told supporters Oct. 25 that when her husband was elected in 2003, more people were unemployed than had voted for him.

Under Kirchner, Argentina's poverty rate fell to 23.4 percent this year from a high of 54 percent in the first half of 2003. Unemployment dropped to a 15-year low of 8.5 percent in the second quarter, down from 21.5 percent in 2002.

Fernandez, a lawyer and mother of two, began her political career in 1985 in the Patagonian province of Santa Cruz, holding several positions in the local legislature. Since 1995, she has served as a congresswoman and senator for the provinces of Santa Cruz and Buenos Aires.

The past two years Fernandez has led efforts to get senate backing for her husband's legislative priorities. They included laws giving the president power to alter government spending without Congressional approval, a change former President Raul Alfonsin said meant the ``death of the Republic.''

Union Demands

One of Fernandez's main challenges will be dealing with pay demands from labor unions, said Ernesto Kritz, an economist at the Center for Labor Studies in Buenos Aires.

Union leaders are expected to seek wage increases of at least 20 percent next year, which may stoke inflation that economists and opposition leaders say is double the officially reported rate of 8.6 percent.

``The unions will be a challenge for the next government,'' said Kritz. ``Fernandez will want to moderate their demands, but it won't be easy to bargain with them.''

Workers under collective contracts, representing 60 percent of all registered employees, received a 22 percent wage increase this year on top of a 21 percent raise in 2006.

As president, Fernandez will also have to decide what to do about electricity rates that were frozen in 2002, leading to a lack of investment in energy exploration and production. Power shortages during the Southern Hemisphere winter this year forced factories to cut output.

`Slowing Economy'

Holders of about $20 billion in defaulted Argentine debt will look to the new government to re-open negotiations after they rejected a 2005 agreement that paid 30 cents on the dollar. Failure to reach an accord would keep the country from being able to directly tap international credit markets.

Economic growth will slow to 7.5 percent this year and 5.5 percent in 2008, according to an Oct. 22 report by Ricardo Amorim, chief Latin American economist at WestLB AG in New York. A central bank survey of 56 economists forecast growth of 6.3 percent next year.

``The corrections the country needs to make will be harder with a slowing economy,'' said Sebastian Briozzo, director of sovereign ratings at Standard & Poor's in Buenos Aires. ``That's why what happens next year is so important.''

To contact the reporters on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net; Eliana Raszewski in Buenos Aires eraszewski@bloomberg.net

Last Updated: October 29, 2007 17:26 EDT