1 of 4 Javier Milei, Argentina’s new president, will take office in December for a fouryear term. — Photo: Natacha Pisarenko/AP Javier Milei, Argentina’s new president, takes office in December for a fouryear term. — Photo: Natacha Pisarenko/AP
The devaluation of the national currency was accompanied by a combination of macroeconomic problems, including very high inflation (more than 140% in 12 months), lack of dollar reserves, debt and increasing poverty. On the other hand, this created a tourist phenomenon: an (even larger) legion of Brazilian tourists in the neighboring country.
When the Argentine peso is worth less, the real becomes stronger. The blue dollar, the main parallel rate to the American currency, rose more than 207% in 12 months. From around 370 pesos in January, it rose to 1,000 pesos just before the elections.
“The exchange rate at this level allows for an improvement in services with excellent hotels, restaurants, wines and tours at costs lower than normal. “This has happened a few times and every time it happens we see an increase in demand,” says Marina Figueiredo, executive director of the Brazilian Tour Operators Association (Braztoa).
The favorable currency conversion scenario has cemented Buenos Aires as one of the top tourist destinations for Brazilians in 2023, the company said. And the uncertainty caused by Milei’s proposals is triggering investor reluctance and could deepen the Argentine peso’s losses, particularly early in the administration.
Economists have heard of the g1 They say the radical measures proposed by the new president, such as dollarizing the economy and abolishing the central bank, pose clear risks to economic policy and require broad congressional support that Milei has not yet demonstrated.
“Milei confirms that it intends to continue dollarization, but there is neither concrete nor a plan on what should be done. This requires a constitutional change like the one carried out in the Cavallo plan in the 1990s,” recalls MB Associados chief economist Sérgio Vale.
“It would take a much more balanced budget scenario and a very strong political force in Congress to pass these measures. And he’s still a long way from that,” he states.
In a report by g1 Regarding the new president’s challenges, LCA Consultores economist Chico Pessoa reiterated the view, saying that dollarization “is such a difficult idea to find support on practical matters that anyone who voted for Milei on this issue, will be disappointed”.
So the unpredictability can drain even more international money from a country suffering from a lack of reserves and cause the Argentine peso to depreciate even further in the coming days and months, allowing Argentina to become even cheaper for Brazilian tourists in the short term.
Since this Monday is a holiday (20) in the country, this Tuesday’s trading session will show the first signs of the Milei effect.
Social networks and memes were the “spearhead” of Milei’s communication in the election campaign
There is hardly a place more famous to Brazilian tourists than the Don Julio restaurant in Buenos Aires. Anyone who gets a table at the renowned example of the “Argentine Parrilla” feels like they have been transported back in time: all you can hear in the area is the Portuguese language.
As the sea of Brazilians search for the best restaurant in the country, the search for a seat starts early: when the news reports g1 When I was there in November, there was a milelong line for lunch as early as 11 a.m. 30 minutes before Don Julio opened its doors.
2 out of 4 The Don Julio restaurant in Buenos Aires: 19th place on the list of the best restaurants in the world and full of Brazilians. — Photo: Reproduction/ Instagram Don Julio Parrilla The Don Julio restaurant in Buenos Aires: number 19 on the list of the best restaurants in the world and full of Brazilians. — Photo: Reproduction/ Instagram Don Julio Parrilla
But it’s not just fame that we live by: A lunch with starter, main course and dessert, accompanied by a bottle of wine, can cost less than R$150 per person. Don Julio doesn’t want to be cheap and it isn’t, especially for Argentines but the price is much lower than any comparable house in Brazilian metropolises.
And there is another attraction in the capital Buenos Aires: Accommodation prices in the highest standard neighborhoods in the Argentine capital are around R$300 per day. These values are hard to compete with what is practiced in Rio de Janeiro or in tourist centers in the northeast.
Prices take into account the conversion of real to Argentine pesos at about 170 pesos per real, which is equivalent to the blue dollar. It is a rate that Brazilians can find in exchange offices or when exchanging through Western Union.
For credit cards, it’s usually worth the MEP dollar. There is a small discount, but it remains a very cheap transfer for the Brazilian.
3 of 4 CoChinChina Lounge, in Buenos Aires: 26th best bar in the world by World’s 50 Best — Photo: Raphael Martins/g1 CoChinChina Lounge, in Buenos Aires: 26th best bar in the world by World’s 50 Best — Photo: Raphael Martins/ g1
For fans of good wine, the benefits are beyond question. Labels from famous top wineries, They are available in Argentine countries for a third of the price sometimes even less. Wine tourism is also booming in the west of the country, where the city of Mendoza is located, and Brazilians are returning home laden with new bottles.
Iduna Weinert, commercial director at Bodega Weinert, says that the significant depreciation of the exchange rate over the last two years has motivated the audience she hosts in Argentina to spend more on the selected labels. Around 70% of the winery’s visitors are Brazilians.
“Wine tourism has grown sustainably over the last 10 years. What has changed is that today we see Brazilians looking for more expensive wines both here in the region and in enotecas. These are highend wines, limited editions… The total volume and that of the more expensive wines have increased,” says the entrepreneur.
However, for them, the task of the Argentine tourism sector from now on is not to let Argentina fall into the stereotype of a cheap tourist destination. “If we take the path of economic and social stabilization, tourism will benefit,” he says.
4 of 4 Bodega Weinert, in Mendoza: Brazilians make up 70% of the company’s wine tourism Photo: Divulgação/Weinert Bodega Weinert, in Mendoza: Brazilians make up 70% of the company’s wine tourism Photo: Divulgação/Weinert
This is because, as with any economic crisis, Argentinians have lost their consumption potential and are feeling how the greater sense of insecurity is affecting the country’s desire as a tourist destination.
Iduna believes that a good destination must offer greater benefits than “weight versus dollar comfort.” “The consumer is very demanding, traveled a lot and has international experience. Building value has to do with good service, a good traffic structure, etc..”
“Argentina, returning to a normal country, will have to compete with Rio, Miami or Paris. I would rather be in this league than experience the loss of human capital and labor that we have suffered in recent years,” he explains.
As far as possible dollarization is concerned, Iduna doesn’t even bring the topic up for now. For the same reasons as the economists interviewed in the report, she does not believe that Milei’s plans can be implemented in the short term.
With this, it also waits for the answer in the next closures of the Argentine peso to understand the country’s first directions after the election. All eyes will be on the perception of who controls the flow of money into or out of the country.