“Chile effect”: Argentines flocking to Santiago to take advantage of lower prices

SANTIAGO – This austral 2016/17 summer, Uruguay, Brazil, Paraguay and Chile, reported excellent tourist seasons, in some cases record, as tens of thousands of Argentines flocked to beaches distant from the stressful climate of the country now ruled by president Mauricio Macri. But it was not only relief and leisure that attracted so many Argentines.

With a particularly strong Argentine Peso, and thus relatively cheap US dollar, as billions flooded into the country after negotiators reached a deal with defaulted bond holders and opened the economy to foreign investors, tourists quickly realized that prices in neighboring countries were most tempting and attractive and thus “express shopping” tours mainly to Chile and Paraguay surged.

This has had a significant impact for the Argentine province of Mendoza, with travel agencies organizing “shopping weekends” to neighboring Santiago and its malls, only a few hours bus trip.

In effect Mendoza retailers have made public that during April overall sales were down 5%, for the sixteenth month running.

“Sales in April dropped 4.8% compared to a year ago, confirming the falling tendency of the past sixteen months” reported the Economic Federation of Mendoza, adding that this was extensive to all items of the retail basic basket.

“Chile effect”

The leading Mendoza daily, Los Andes pointed out that the Economic Federation blames what it describes as the “Chile effect”, as one of the main factors in the decrease of retail sales, including such areas as Toys, Books, Clothing, Sportswear and Electronics.

To counter the “Chile effect” local businesses are demanding lower provincial taxes plus a one year “tax free promotion” for tourists and visitors arriving in Mendoza.