Uruguayans have spent a record amount in Argentina so far this year with the tab near US$1 billion, taking advantage of a deep economic crisis that’s left food, vacations and shopping costing a fraction of the price back home.
Uruguay, a country of 3.4 million people, has seen its citizens and residents take 2.9 million trips so far this year into neighboring Argentina where 140% inflation and multiple exchange rates make everything from grocery shopping to ski vacations a bargain. That’s up from almost 1.2 million visits from Uruguay in the same period in 2022, though one individual may account for multiple trips.
Uruguayans spent $960 million in Argentina in the first nine months of the year, more than double from the same period last year, according to data compiled by Uruguay’s Tourism Ministry. Third quarter spending hit a record too.
Dollar poor Argentina strictly controls the greenbacks its people can buy at the official exchange rate of 350 pesos per dollar, which is fuelling a black market where a dollar costs about 960 pesos. A growing number of Uruguayans flush with dollars are splurging on cheap flights to Patagonia, site seeing in Buenos Aires and snapping up deeply discounted household staples from laundry detergent to coffee in Argentine supermarkets.
The upshot is Argentina is sucking hundreds of millions of dollars in consumer spending out of Uruguay’s economy, which is still reeling from a deep drought that slashed the key soy harvest earlier this year. Analysts have steadily cut their Uruguay growth outlook for 2023 to 0.8%, according to the central bank’s most recent survey.
Delfina Matos, a senior economist at Montevideo-based consulting firm Exante, expects Uruguayans to continue spending big in Argentina through next year.
“It’s clearly having an impact” on Uruguay’s economy, Matos said. “We are seeing a big hit on retailers, especially along the border where they are suffering from contraband and people shopping on the other side.”
by Ken Parks, Bloomberg