Cost of Living in Argentina
A reader recently mentioned that Argentina has experienced inflation of about 10% this year and is expected to experience further inflation of 10% during the next year. With the dollar/peso exchange rate still hovering around 3:1 , that would seemingly be a concern for anyone expected to move here. I'm going to address this issue in this post.
Since the Expatriado moved to Argentina, prices have gone up about 25% yet the dollar value has stayed the same. This means that the cost of living has gone up therefore reducing in a dramatic way the advantage of living there. Furthermore, inflation is predicted to go up another 10% or so next year, while the dollar will continue to be steady at around $3. Thus, the promise of living in a cosmopolitan area with a reduced cost of living is coming to an end. Expatriado: Do you think it still makes sense to go live there in light of these new developments?
One of the Cheapest Cities Worldwide
Mercer Human Resource Consulting, which publishes an annual list of the cost of living in cities worldwide, recently put Buenos Aires 142nd, out of 144 cities ranked. What was slightly more expensive than Buenos Aires? Bangalore, India. The only two cities that were cheaper were Manilia, Philippines and Asuncion, Paraguay.
The fact that there was high inflation this last year does not surprise me at all. The economy is on the mend. Unemployment is down. There are more pesos to be spent and more employed people to spend them. Looking at where Argentina ranks -- 142nd out of 144 cities -- there is nowhere for it to go but up. So, yes, things may start to cost more here.
However, you can still live in a cosmopolitan capital city with a very European culture, architecture, and citizenry at the price of living in Bangalore, India. In what European capital city can you buy a 1000 sq. ft. apartment in one of the nicest areas in town for just $100,000 USD? None.
Lifestyle and Culture Matter
Sure, you could go to India, the Philippines, Thailand and any number of other countries and pay about the same as in Buenos Aires. Perhaps next year Bangalore will end up being cheaper than Buenos Aires. However, you won't find anywhere else that lets you live a western lifestyle at the same price as Buenos Aires.
I've spent a few months in India and even though I was amazed at just how cheap everything was, there was a price to pay for that -- people urinating in the streets, rampant poverty, shantytowns everywhere there was an open space. It wasn't just the poverty, it was the culture also. The television programs don't show men and women kissing. When I went to a bar / dance club the men and women were not dancing together. Most of the guys my age were still virgins and didn't date because they were expecting their parents to find them a wife.
There is no way, despite the amazing cost savings from living in India, that I could ever live in a place like that with such a foreign culture. If you look at the other cities that are on the list that are near Buenos Aires -- not a single one can provide the same kind of lifestyle that Buenos Aires does.
Expect Costs to Increase
It is only natural that costs are going up in Argentina. They are just so low right now that it would be difficult for them to go any lower. Nevertheless, this place is a bargain. In 2002 there were 10,000 American expatriates who were registered with the U.S. Embassy as permanent residents here. Today that number is 35,000. My parents just bought an apartment two blocks from mine because they came here and fell in love with the city. Their downstairs neighbor is American also. One of the biggest real estate companies in the city has its hands full just dealing with expatriates who are coming here.
There's never been a better time to be in Buenos Aires and if my expenses go from $1000 USD per month to $1100 USD per month next year, so be it. It'll still be a far better and cheaper lifestyle than when I was in the U.S. Costs won't go up forever, either. They'll rise until they hit some equilibrium. If inflation really starts to get out of control, the exchange rate will rise and American expatriates who have their income in dollars will be protected.