In the last five months there has been a decrease of between 38% and 42% in the amount of chileans and brazilians who come to Argentina to make their purchases. The phenomenon is due to a series of changes that have occurred in the local economy in recent months, mainly since the arrival of the new Government.
The fluctuating Argentine economy has a full impact on the pockets of local consumers, but it also affects the purchasing power that the inhabitants of neighboring countries have in our country. Last year, for example, the national government decided to give foreigners the benefit of a differential exchange rate, which allowed them to access our products at much lower prices than those they find in their markets. This led to tens of thousands of international tourists – mainly from neighboring countries – traveling en masse to do their shopping in the country. The border cities witnessed this movement.
In this way, inbound tourism recovered records similar to pre-pandemic levels as of March 2023 and remained at similar or higher levels of activity in 10 of the last 11 months. “The latest figures show a number of travelers 4% higher than what was verified before the pandemic,” explains a report from Ieral, (Mediterranean Foundation).
The study, prepared by Marcelo Capello and Marcos Cohen Arazimaintains that in the first two months of 2024, outbound tourism reached 2.16 million tourists (86% of that observed in January-February 2019, with 2.51 million tourists), while incoming tourism was 1.66 million tourists in the same period, reaching 103% of pre-pandemic levels (1.61 million tourists).
In this way, the deficit in the tourism balance (in travelers) in January – February 2024 has been around half a million tourists, resulting in the lowest record of the decade, if 2021 is excepted, in which flows tourism were meager as a result of the pandemic.
A factor that is considered fundamental to determine the attractiveness of the country to receive international tourists is given by the purchasing power of salaries. The greater the purchasing power of non-resident salaries, in terms of consumption of goods and services in Argentina, the greater the probability of receiving international visitors.
Likewise, the purchasing power of Argentine salaries will determine the probability of having more or less departure of residents for tourism abroad. This purchasing power results from the conjunction between the evolution of salaries and prices of the countries (sender/receiver), exchange rate levels, taxes, among others.
“To analyze the evolution of the purchasing power of foreign tourists, the situation of Chileans and Brazilians, who represented 37% of visitors during 2023, is considered as an example. The evolution of salaries in these countries was analyzed, measured in hard currency. With this information, we proceeded to see the purchasing power of these salaries in terms of consumption of goods and services in Argentina, assuming conversion to the value of the “blue dollar.” Although some consumption could have been made at the official price, in general, in the period analyzed it is expected that operations through informal markets will have predominated, given the high exchange rate gap that was verified,” the Ieral specialists clarified.
According to the study, the first element that stands out is that, during 2023, a year of significant foreign exchange generation from inbound tourism, the purchasing power was fueled by a significant exchange gap that generated the purchasing power of visitors. international was high. Chileans were able to buy, on average, 12% more than the average of the last 5 years, and Brazilians were able to buy 16% more than the average.
Secondly, it is highlighted that purchasing capacity oscillates, with common features that are due to Argentine macroeconomic policy, but also with differences that come from the different pace of devaluation, growth of wages and prices in other countries.
Of course, today the situation is different. The strong devaluation, the notable shortening of the exchange gap and the growing inflation caused our country to become less attractive to foreigners. Chileans lost 42% of their purchasing capacity from December to the present, while Brazilians lost 38%. “This situation does not immediately impact tourism flows, but it will certainly have medium-term effects on the level of activity,” they say. Capello and Arazi.
Historically, inbound tourism has been a generator of foreign currency, which is made up of the expenses made by international travelers in the country. The total income flow from inbound tourism has remained close to the USD 5 billion during the last decade, except for 2020 and 2021, which were years of travel restrictions.
“In 2023, the income generated by inbound tourism will reach USD 5,442 million and they were higher than those of 2019, being the second best record in two decades,” the report details.
“In the case of outbound tourism, the outflow of foreign currency has fluctuated more erratically, responding more elastically to changes in relative prices that favored tourism abroad. In 2023, residents’ trips abroad explained an outflow of USD 7,258 million. The balance, although negative, is among the lowest of the decade,” he adds.
In the first two months of 2024, the trading figures in the foreign exchange market also reflect important trend changes. With the notable decrease in the exchange gap, tourism income settled through the exchange market multiplied by 3 compared to the same period in 2023, while expenses (now made more expensive by a higher exchange rate, but also with taxes on consumption abroad) fell by around 23%.
