The tourist season with which 2024 began in Argentina has borne fruit two faces. The most visible is the decline in domestic tourism, which is seen in the first 45 days a retraction of 13%The other is that the arrival of foreigners is growing and with them earnings in foreign currency.
In any case, and despite the effect of the devaluation which led many Argentines to leave their passports in the drawer, The balance of the Travel account continues to be negative, although much lower than in previous years. In this way tourism can become an ally of Javier Milei and Luis Caputo’s economic plan to rebuild the trade account.
From a report by IERAL economists Marcos Cohen Arazi and Bautista Martina Baldi it emerges that with the acceleration of inflation, the loss of purchasing power and economic uncertainty “the first data for 2024 can be seen to explain the (so far ) worst performance of summer tourism in the last 8 years -except the first summer of the pandemic-”.
Available data shows that the number of tourists was recorded in the months of December and January a year-on-year decrease of 13%. “The month of February can contribute to improving the record,” the economists underline.
In this scenario, international tourism is supported and gains participation compared to domestic tourism. Therefore, foreign exchange generation from inbound tourism would have reached a level close to 5.5 billion dollars, with what It is among the highest of the last decade, according to the IERAL estimate.
Last year, Argentinians who traveled out of the country would have spent close 6.95 billion dollarstherefore the balance of that account remains negative for 1.5 billion dollars. By 2017 the deficit had been overcome 6 billion dollars.
“Outbound tourism, which grew less than inbound tourism, was not explosive and this contributes to generating a limited foreign exchange balance, something that collaborates with macroeconomic equilibrium“, they propose.
Regarding what happened in January with this account, ACM says that, according to the Central Bank’s exchange balance, foreign currency outflows from travel expenses and card spending reached $460 million, a 31% year-over-year decline. “Although during the previous year the expenses related to this concept had increased, these last two months have shown a notable decrease compared to the two-month period December – January 2023, decreasing 24% on an annual basis”.
On the other hand, revenues showed an increase of more than 61% year-on-year, reaching 265 million dollars. As a result of this dynamic, the tourism balance presents a deficit of 195 million dollars, a decline of 60% year-on-year. “This result comes after the exchange rate correction in mid-December, which made the exchange rate to which residents have access more expensive and slowed the outflow of foreign currency through tourist card payments,” they point out. ACM.
According to data collected by the Argentine Chamber of Medium-sized Enterprises (CAME), between the second half of December 2023 and January 2024 More than 17 million people mobilized across the country. Although the season numbers are not closed, in that period there was a decline of 17% compared to the 2020 season and 13% compared to 2023.
Data from the Association of Tourist Hotels of the Argentine Republic (AHT) show that in January the hotel occupancy level was 6 percentage points lower than that of the previous year. “In recent months we can identify it Part of the decline in domestic tourism could be offset by a significant inflow of international tourists. Therefore, international visitors represented on average 38% in January this year, while the previous year, in the same month, they represented 33%.
In January, more than 1,300,000 foreign touristsaccording to estimates from the Nation’s Undersecretariat for Tourism, which show an increase of 18.8% compared to the same month last year and represent an income of 656 million dollars24.1% more than the reference period.
“Thanks to the sustained growth of inbound tourism, the sector is consolidating itself as one of the engines of Argentine activity,” said the Undersecretary of Tourism, Yanina Martínez. “We have very good projections that tourist arrivals from around the world will continue to increase in 2024”he concluded.
The countries with the largest share of total tourist travel were Brazil, with 21.6%; Chile, with 15.7%; and Uruguay, with 13.9%. The United States exceeded 10%, with a total of 93,689 tourists.
The effect on employment
The tourism sector is a major generator of formal jobs and was 9% higher than its pre-pandemic level as of October. But IERAL warns”The current poor performance of activity could lead to a slowdown in job creation, depending on the evolution of short-term tourism and medium-term expectations.”
The latest official data shows that in the second quarter of 2023 the sector generated almost 484,000 formal jobs. It is a major job creator, surpassed only by retail (643,000 jobs), teaching (531,000 jobs) and construction (486,000 jobs).
While at the national level the sector represents 7.2% of formal private jobs, this participation grows substantially in regions such as the province of Tierra del Fuego (13.6%), Río Negro (11.2%) or CABA (9.6%).
“This data on the impact of work comes with a delay, as has been expressed and They do not yet incorporate the possible effect of low summer performance. Therefore, we will have to closely monitor the situation of the sector both in the short term, due to the evolution in the rest of the summer, but also for its prospects in the new economic scenario”, says IERAL.
Source: Clarin
