Argentina’s wealthier neighbours are vacationing far less in the country as President Javier Milei’s currency policies turn a dreamy tourist bargain into an expensive outlier.
Tourists visiting from Uruguay and Chile – countries that boast higher per capita incomes than their larger neighbour — fell at least 30 percent in December from a year ago, according to Argentina’s INDEC national statistics bureau.
Uruguayans spent about US$780 million in Argentina last year, a drop of US$469 million from 2023, as the number of visitors tanked by nearly half to just 2.1 million over that period, according to Uruguay’s Tourism Ministry.
For all of last year, Argentina lost US$2.1 billion from tourism based on how much its nationals spent abroad versus how much foreigners spent in Buenos Aires and beyond. In 2023, Argentina’s tourism deficit was US$1.2 billion as policy disasters made the peso cheap during the previous government.
Milei’s policies have narrowed the gap between the official and parallel exchange rates that made his country a bargain for tourists. His decision to slow the pace of the official exchange rate’s crawling peg and high inflation could make Argentina even more expensive for Uruguayans this year.
“If that continues, it’s likely that 2025 will be a year where we see fewer trips to Argentina, and therefore less consumption in Argentina, and more Argentines visiting Uruguay,” said Florencia Carriquiry, a partner and economist at Montevideo-based consulting firm Exante.
Already, airline ticket sales to Argentina by 5M Travel Group — which operates five travel companies in Uruguay — fell about 25 percent during the fourth quarter of 2024, which director Andres Gil attributed to the unfavourable exchange rate and a wave of strikes at state run airline Aerolíneas Argentinas.
“A direct competitor to Argentina has also become a lot cheaper, Brazil,” he said. “The depreciation of the real against the dollar has been very strong. Brazil is an extremely favourable option versus Argentina.”
It’s not just Uruguayans staying home or going elsewhere, of course. Argentines are indeed flocking to Uruguay’s Atlantic coast beaches to enjoy the Southern hemisphere summer. Almost 109,000 entered Uruguay last month, a 10 percent increase from a year earlier, according to INDEC.
The trend marks a reversal for business owners like Guillermo Luzardo, who cut staff and froze expansion plans at his supermarket chain in the border town of Salto because shoppers instead crossed the bridge into neighbouring Concordia, in Argentina’s Entre Ríos Province, to buy cheap petrol and groceries during 2022 and 2023.
Milei’s decision to hike fuel prices — a key draw for Uruguayans who combined trips to the gas station with dining out and shopping — and an end to cheap Argentine pesos popped the consumption bubble that was sucking the life out of businesses in Salto, he said. Luzardo’s sales rose about 20 percent last year and he opened his fifth supermarket in November.
“Things started changing in 2024 and last month was our best December in five years,” said Luzardo, who is also chairman of the Salto chamber of industry and commerce. “You’re seeing retail sales go up, more businessmen are hiring people and more investments.”
by Ken Parks, Bloomberg
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