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On the Friday before Argentina鈥檚 primaries, markets finished the trading day on an  note. Highly regarded polls put President Mauricio Macri and his main opponent, Alberto Fern谩ndez, within striking distance, allowing the government to  the risk of a serious loss that would raise questions about Mr. Macri鈥檚 re-election in the October presidential election.

But as the results trickled in on Sunday evening, markets were quickly disabused of their optimism.

Voters in the primary, known as the PASO, overwhelmingly rejected Mr. Macri in favor of Mr. Fern谩ndez and his running mate, former President Cristina Fern谩ndez de Kirchner. In the end, Mr. Macri only won in the most strident strongholds of anti-Peronism: C贸rdoba province, and the City of Buenos Aires.

Worse still, Mr. Macri鈥檚 Juntos por el Cambio鈥檚 star candidate, Buenos Aires Governor Mar铆a Eugenia Vidal, was trounced by Ms. Fern谩ndez de Kirchner鈥檚 controversial former Finance Minister, Axel Kicillof.

In retrospect, the government鈥檚 optimism and the market鈥檚 hopes were premised on both flawed polling and wishful thinking unanchored by past election experiences worldwide: The belief Mr. Macri could be competitive in a country with a misery index (inflation + unemployment) among the highest in the world simply defied common sense.

Nevertheless, the primary result sent shockwaves through Argentina鈥檚 financial markets and politics.

The market鈥檚 mood on Monday was nothing short of panic. The country鈥檚 stock market saw the world鈥檚 largest single day  since 1989. The peso, already buffeted by a year of devaluations, saw its value decline by almost 38 percent against the dollar, before recovering and ending the day down 17 percent. Argentina鈥檚 country risk shot up by 68 percent, to the  level since 2009.

How did it come to this?

When Argentines narrowly elected Mr. Macri in late 2015, it was as much a vote to rejectkirchernismo as a vote for a change in the country鈥檚 statist economic management and divisive populism.

Mr. Macri offered major changes, promising voters normalcy in Argentina鈥檚 relations with the world; stronger democratic institutions; the rule of law; lower poverty; less government intervention in the economy; the lifting of capital controls; as well as tax and spending cuts.

As it turned out, fulfilling some of these promises proved difficult.

A celebrity president

On foreign policy, Mr. Macri exceeded expectations.

He was welcomed with open arms at international fora like the G-20 and the World Economic Forum in Davos. Though he lacked a majority in congress, he persuaded lawmakers to approve a settlement with holdout bondholders whose litigation had denied Argentina access to international credit markets for a decade.

He built friendly relationships with both the United States and China, despite increasing tensions between Washington and Beijing. He proved adept at managing temperamental counterparts, including Donald Trump and Jair Bolsonaro. He was at the forefront of regional efforts to condemn Venezuela鈥檚 dictator, Nicol谩s Maduro. Finally, he played a role in negotiating the historic Mercosur-EU free trade deal done.

Unfortunately for Mr. Macri, voters do not vote based on foreign policy issues, but rather, as they say in Argentina, 鈥�votan con el bolsillo.鈥�

Stalled reformer

Under Mr. Macri, Argentina鈥檚 economic performance was less notable than its diplomacy. From early on, he was determined to move slowly as he addressed the country鈥檚 chronic overspending so as not to provoke social unrest. He called his steady process of fiscal consolidation and reform gradualismo.

Buoyed by enthusiastic capital markets tempted by a country with low debt levels and a pro-market government, Argentina was able to borrow at low interest rates. Gradualismoseemed like a winning approach, and the government attracted tens of billions of dollars in foreign loans. However, lulled into complacency by cheap credit, Mr. Macri cut spending too slowly.

At the height of Argentina euphoria, in 2017, Argentina sold a now  100-year bond, and Mr. Macri鈥檚 party triumphed in the midterms. The economy was growing, inflation was declining and poverty had reached new lows.

Easy come, easy go

But the next year would be nothing short of a nightmare for Mr. Macri.

After his midterm victory, Mr. Macri spent his political capital on a controversial pension reform that was the start of a long decline in his popularity. The reform sparked violent street protests, and ultimately undermined the government鈥檚 efforts to pass critical labor reform.

In late 2017, Mr. Macri鈥檚 cabinet chief, Marcos Pe帽a, further tarnished Mr. Macri鈥檚 reformist image when he appeared to pressure the central bank to lower interest rates, despite the country鈥檚 struggles to reduce inflation. Meanwhile, the government was alienating middle class voters by substantially increasing utility prices, as it continued to grapple with the high deficit it inherited from its populist predecessors.

The coup de gr芒ce for gradualismo was the combined effect of Federal Reserve interest rate hikes in the United States last year, and Argentina鈥檚 worst drought in decades. Suddenly, Argentina鈥檚 main sources of dollars had dried up. Amid a run on the peso, the government turned to the International Monetary Fund 鈥� a b锚te noire for many in Argentina 鈥� for a massive loan. Last September, after Argentina had suffered another run on its currency, the IMF bumped up its loan to $56 billion, the highest bailout in the Fund鈥檚 history. By the end of the year, the peso had lost half its value.

From reformer to firefighter

The crisis transformed Mr. Macri from a star reformer into a firefighter.

Argentina鈥檚 peculiar relationship with the dollar means a peso devaluation is quickly passed onto consumers through price increases. As a result, last year鈥檚 currency crises rapidly worsened inflation, and real wages  by over 10 percent. Lower aggregate demand increased  to over 10 percent, and raised higher poverty to  in 2018. (Prior to the current crisis, poverty was projected to  35 percent this year; now it will likely be worse). But, out of fears of worsening inflation, the government was unwilling to increase salaries.

Political kryptonite

As this year鈥檚 election drew near, Mr. Macri hoped voters would credit his skillful diplomacy, reward his performance fighting crime, and punish the Peronists for the last government鈥檚 corruption. After all, he could not run on his economic management. And thanks to IMF loan conditions, he could not ramp up public spending, or print pesos, to juice the economy.

Instead, Mr. Macri鈥檚 campaign tried to provoke fear of Ms. Fern谩ndez de Kirchner to mobilize voters. His allies went so far as to warn that her return to power risked turning Argentina into . In an appeal to centrists, Mr. Macri chose a Peronist, Senator Miguel 脕ngel Pichetto, as his running mate. Mr. Pichetto also tried to frame the election as a referendum on Ms. Fern谩ndez de Kirchner鈥檚 : 鈥淭wo options are available: the consolidation of a democratic model, and authoritarianism.鈥�

But as it turned out, James Carville鈥檚 famous dictum, 鈥渋t鈥檚 the economy, stupid,鈥� applies to Argentina too. Especially in the middle of a deep recession.

In Sunday鈥檚 PASO, it is now clear, voters sought to punish Mr. Macri for the faltering economy and the widespread pain of budget cuts. Little else mattered.