GUALEGUAYCH脷, Argentina 鈥� On a recent cross-border shopping trip, four friends from Fray Bentos, Uruguay, visited the nearby Argentine city of Gualeguaychu, where they could afford to live lavishly and snap up eye-popping bargains.
Thanks to a huge disparity in the two South American countries鈥� currencies, Stella Ferreira and a friend treated themselves to a low-cost pampering at a hair salon, while two other friends hunted around for stylish but inexpensive pants.
With its economy faltering, Argentina鈥檚 peso has plunged against the U.S. dollar and its is 115.6%, one of the highest rates in the world. In contrast, Uruguay鈥檚 economy is more stable, with low inflation and a stronger currency.
The result has been a huge flow of shoppers from Uruguay throwing an economic lifeline to struggling Argentine stores and restaurants in cities like Gualeguaych煤, Concordia and Col贸n.
But there's a downside for Uruguayan businesses along the border: In the provinces of Salto, Paysand煤, R铆o Negro and Soriano, municipal authorities say 170 stores closed in the first five months of this year. Businesses still open complain they hardly have any customers.
With about $100 apiece, the four friends planned to get their hair done, buy clothing, gasoline and other goods and eat out in Gualeguaych煤, in Entre Rios province, which for more than a year has been a shopping mecca for Uruguayans looking for deals. Back in Uruguay, Ferreira, 29, said that same $100 would 鈥済et your hair done and not much else.鈥�
Uruguayan businesses just across the border are finding it hard to compete with such bargains.
鈥淓verything is very quiet,鈥� said Susana Guerrero, owner of a shop that sells cheese and sweets in Salto. 鈥淚 lost an employee and I did not replace him.鈥�
Guerrero went to Gualeguaych煤 on an exploratory trip and now sees why Uruguayans are going there to shop. The price differences between the two countries can be staggering. A liter of sunflower oil that costs $5 in Uruguay is 50 cents in Argentina. A jar of skin-care cream that costs $10 in Uruguay can be had for a dollar across the border. And a liter of gasoline in Uruguay is close to $2. In the Argentine province of Entre Rios it is 52 cents.
鈥淵es, it鈥檚 cheap and we can鈥檛 fight it,鈥� Guerrero said.
Fray Bentos storefronts, meanwhile, are covered with signs offering specials in a bid to attract customers.
鈥淭his year sales have dropped by 40% or more,鈥� said Alicia Nedor, who works in a pharmacy. She said the sector is seeing its worst crisis in decades.
Nedor, 70, said several small businesses have closed in Fray Bentos and the big ones have laid off staff.
Cross-border bargain hunters also hail from neighboring Chile, Paraguay and Brazil. In Uruguay, industry representatives have called the phenomenon a 鈥渂order pandemic鈥� and even the country鈥檚 president has acknowledged the problem.
鈥淭he prices of goods in Argentina are extremely cheap, and naturally its neighbors consume where it is cheaper for them,鈥� President Luis Lacalle Pou said in early May. 鈥淭his creates an imbalance. We have applied measures, but it is not enough.鈥�
The government then introduced additional measures, including tax breaks for Uruguayan businesses and a 5-kilogram limit on what Uruguayans returning from Argentina can bring with them. But business leaders say the controls are not applied and are demanding a 鈥渮ero-kilo鈥� border policy, something that Lacalle Pou has rejected.
Lacalle Pou said the government will seek to make sure contraband doesn鈥檛 cross the border, but added that 鈥渋t is impossible to solve the exchange rate problem with Argentina.鈥�
The Catholic University of Uruguay has even developed a Border Price Indicator for the Argentine city of Concordia, some 200 kilometers (125 miles) north of Gualeguaych煤. According to its latest data from May, it is 59% cheaper to buy a basket of food, drinks, clothing and household products in Concordia than in the Uruguayan town of Salto.
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The price gap reflects the devaluation of the Argentine peso, which has lost 47% of its value against the U.S. dollar at the official rate so far this year.
Argentina has struggled with inflation multiple times over the last century. Its current crisis started in 2018 but has worsened in the past year and a half, said Mar铆a Castiglioni, director of C&T Asesores Econ贸micos. The arose from several factors, she said, including government overspending and problems in monetary policy.
The country doesn't have funds to solve its overspending because it has lost access to the international debt market after multiple defaults on its loans. The loss of access means other countries do not feel confident lending money to Argentina.
As this debt crisis arose, the government turned to the country鈥檚 central bank for assistance. In an effort to sustain the economy, the central bank hasn鈥檛 stopped printing pesos 鈥� which has led to the devaluing of the peso. The increase in the flow of pesos also led to ballooning inflation that every day.
On holidays and weekends, long lines of cars wait to cross the General San Mart铆n International Bridge that crosses the Uruguay River and joins Argentina's Gualeguaych煤 with Fray Bentos in Uruguay.
Between June 30 and July 4, which included the first days of the southern winter vacation for Uruguayans, more than 100,000 people left Uruguay for Argentina, most of them through the three border crossings in Entre R铆os. The majority were Uruguayans, although there were other nationalities. Uruguay has a population of about 3.4 million people.
鈥淗ere in Gualeguaych煤 you find all of Fray Bentos shopping,鈥� laughed Carolaine Sololuce, one of Ferreira鈥檚 friends. 鈥淚t鈥檚 nice to come, because of all the activity, the stores 鈥� .鈥�
Sololuce was happy because she bought a pair of pants for 9,000 Argentine pesos, or $18 on the black market. In Fray Bentos, the pants would have cost $48.
Claudio Gatt, who owns the hair salon Ferreira and her friends went to, said that since the economic crisis caused by the coronavirus pandemic in 2020 and 2021, the flow of Uruguayans into Argentina has been like oxygen.
鈥淚f they were not here, sales would drop by a minimum of 50%,鈥� he said.
Signs reading 鈥渄ollars accepted鈥� hang in store windows in Gualeguaych煤 and its main streets are filled with visitors from different parts of Uruguay. Half of the purchases of medicines and cleaning supplies in the city are by Uruguayans, according to a local business chamber.
鈥淲e are going to become Uruguayans pretty soon,鈥� said Sixto Fernandez, a 68-year-old Argentine retiree. 鈥淵ou go to the supermarket and it鈥檚 always full. They鈥檙e everywhere, they鈥檙e like ants.鈥�
In a supermarket parking lot, Diana Rocco, 30, loaded several bags of cleaning products and groceries into her car. She was pleased with the mangoes she bought for half of what they would have cost in Uruguay.
Rocco, who is from the Uruguayan town of Palmitas, said she plans to return to Gualeguaych煤 because her salary as a security guard is barely enough to cover her expenses back home.
For Alejandro Ramos, a 49-year-old Argentine teacher who lives in Gualeguaych煤, the problem is not the Uruguayans, because 鈥渢hey come and buy legally.鈥�
The problem 鈥渋s us," he said. "We first have to realize that we are an economic disaster in this country.鈥�
