Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Argentina’s economic crisis fuelled a tourism boom last year as cheap steak, wine and shopping lured foreigners, but the rapid appreciation of the peso under libertarian President Javier Milei is now deterring some visitors and sending even locals bargain-hunting abroad.
The number of tourists spending at least one night in Argentina fell 20.2 per cent in the six months to November compared with the same period in 2023, while the number of Argentine residents exiting soared 37.7 per cent, according to data from the national statistics agency published on Monday.
Tourism, one of Argentina’s fastest-growing industries, accounted for 8.8 per cent of GDP in 2023.
The Argentine peso has appreciated by more than 40 per cent against its trading partners’ currencies this year in real terms, as the country’s triple-digit inflation raised prices in pesos and Milei kept the official exchange rate mostly steady.
The peso has also strengthened sharply on the black market, with Milei’s macroeconomic stabilisation programme boosting demand for local currency and curbing that for greenbacks.
As a result, Argentina has become increasingly expensive for visitors, reversing the situation from last year when the previous left-leaning government’s policies had resulted in a fast-depreciating black market peso, decimating Argentines’ purchasing power but creating cheap deals for holders of foreign currency.
“One year we’re expensive, one year we’re cheap,” said Amilcar Collante, an economics professor at La Plata National University. “It’s the mark of an economy that still hasn’t reached the stability that our neighbours have, and tourism is one of the most reactive sectors to that volatility.”
Latin Americans were far more put off by Argentina’s price rises than people from other regions, with visits by residents of Uruguay, Bolivia and Chile falling 50.9 per cent, 33.4 per cent, and 28.3 per cent, respectively, in November 2024 compared with November 2023.
By contrast, the number of US and Canadian residents arriving fell just 11.5 per cent in November year on year, while the number of European residents visiting actually grew 3.5 per cent.
Much of the fall in Latin American visitors came from a steep 40 per cent drop in day trippers entering Argentina year on year in November, as Bolivians, Chileans, Uruguayans and Paraguayans stopped coming to buy cheap fuel and groceries. The trend has inverted this year, with the number of Argentines day-tripping to neighbouring countries more than doubling in November year on year.
Official data on hotel occupancy shows a 16.2 per cent fall in the six months to October compared with the same period of 2023. In the vineyard region of Cuyo, popular with both Argentines and foreigners, occupancy was down 22.6 per cent in October compared with the same month last year.
Meanwhile the number of Argentine residents visiting neighbouring Brazil rose 19.4 per cent in November year on year, with visitors benefiting from the depreciation of the Brazilian real, which has lost more than a fifth of its value against the dollar this year.
“This is just the cycle of tourism in Argentina,” said Andrés Deyá, president of the country’s Federation of Associations of Travel Agencies.
The fall in demand had already begun to moderate in recent months, he added, as Argentines felt the impact of slowing monthly inflation and businesses offered instalment plans to boost sales.
But economists warned that the fall in foreign arrivals and surge in Argentines going abroad could put pressure on the central bank’s scarce reserves of hard currency in the coming months.
Think-tank Fundación Mediterránea estimates that the tourism deficit — the gap between hard currency spent in Argentina by visitors and what Argentine residents spend abroad — was more than $3bn in 2024, compared with $1.8bn in 2023, and that will grow still more in 2025.
Brenda Buchanan, general manager of Villa Vicuña, a boutique hotel chain, said January reservations at their branch in the northern wine region of Cafayate suggested an occupancy rate well below last year’s 85 per cent, but she hoped it would reach 65 per or 70 per cent with last-minute bookings.
“Our aim in the long term is to find tourists who are willing to pay what Argentina is worth, and not just an Argentina that is so devalued it’s given away, like last year,” she added.
Data visualisation by Ray Douglas