Work Abroad but earn in USD

Wednesday, March 09, 2005

Living in Argentina: European Quality Lifestyle, Bombay Prices

When traveling to a foreign country on holiday, we usually don't take the time to get a feel for the general cost of the country. Many times we're traveling on packages or tours that have been pre-paid or we make sure to bring enough money with us to get everything we'd like on the trip. However, for expatriates choosing to live in a foreign country, it is important to actually have a good understanding of the local prices. A recent study published in early March 2005 by UBS (Union Bank of Switzerland) in the Business Times in Singapore placed Buenos Aires just after Bombay on a list of the cheapest world cities.

Cheapest World Cities

  1. Bombay (Mumbai), India
  2. Buenos Aires, Argentina
  3. Kiev, Ukraine
  4. Bucharest, Romania
  5. Sofia, Bulgaria

Most Expensive World Cities

  1. Oslo, Norway
  2. Hong Kong, China
  3. Tokyo, Japan
  4. New York, United States
  5. Zurich, Switzerland
  6. Copenhagen, Denmark
  7. London, United Kingdom
  8. Basel, Switzerland
  9. Chicago, United States
  10. Geneva, Switzerland

Recent Changes

The recent displacement of major US cities from the most expensive list has a lot to do with the depreciation of the US Dollar, making the United States more affordable in European terms. Tokyo also feel to third place on the most expensive cities list due to the depreciation of the Yen. On the other hand, the high rankings for so many European cities are due to the rapid appreciation of the Euro in recent years. If this list were compiled before 2001, Buenos Aires would certainly be nowhere near the top of the cheapest cities list. On the contrary, it was the most expensive city in South America.

However, if you ask a porteño whether they think their city is cheap or not, you'll likely get laughed -- or worse. Salaries did not adjust upward to compensate for the depreciation of the Argentine peso, so a porteño who was making $1500 pesos before the devaluation would still be making $1500 pesos after. The difference, though, is that those pesos were once worth $1500 USD and now they are worth about $510 USD. The prices of locally-made goods have adjusted downwards as well, but expensive imports are now prohibitively expensive for most porteños.

Implicatinos for the Expatriate

If you're coming to Buenos Aires to live here and you will be earning dollars or euros from your home country, the effect is that your spending power will be multiplied by a factor of three to four if you can purchase local products and services. If you're always buying imports, you won't see much savings. Electronics, luxury items, and many other imports are subject to high import tariffs to stimulate local industry.

If you plan on coming to Buenos Aires and seeking a job here, be prepared to take a large pay cut from what you're used to earning. You may not find the city so cheap if you're earning your salary in pesos. However, if you're a businessperson looking for competent and capable workers, you'll find they're readily available and quite the bargain here in Buenos Aires.

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Anonymous Anonymous said...

the exchange rate is a rig job that will propel BA out of the world's cheapest cities at any given point. Hold on to you pants when that happens. If you rely on dollars.

5/03/2005 02:33:00 AM  
Blogger ABA said...

I've heard comments like "Anonymous" since 2002. I read on public message boards how people said tourism would slow down, how the peso would keep continuing to get stronger, etc. I've been posting since 2002 the fair value of the peso is 2.75 - 3.25.

After moving to Argentina and becoming entrenched in business here I can tell you there are serious problems here. It will NEVER go back 1 to 1. I doubt it will ever go back 2:1 If you are earning Dollars or Euros, Buenos Aires is a dream.

5/19/2005 10:07:00 AM  
Anonymous Anonymous said...

The problem, as you mention frequently, is that it's impossible to rely on the cost of living staying low. In Bucharest, for example, an apartment that was $15,000 five years ago is now $60,000, and new construction for equivalent space is well over $100,000. With the prospect of joining the EU on the horizon, the comfortable living on $1000/month is in doubt. If long term retirement on a fixed income is the premise, I would hesitate to bet on it. Someone in a working situation, or a business, where income can rise with the rest of the country's is in a better position.

5/26/2006 04:56:00 PM  

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