Living costs in Argentina are a factor which expats need to appreciate before they even contemplate a move to this region of the world. This is a country which has attracted its fair share of criticism and praise over the years and indeed the country is still in dispute with the UK with regards to the Falkland Islands. However, this has not stopped Argentina becoming one of the new up-and-coming areas with an economy which has improved dramatically over the years and a cost of living which is on the whole very reasonable compared to countries such as the UK and the US.
However, there is so much more to life in Argentina and the cost of living in Argentina does vary from place to place and needs to be addressed sooner rather than later. So what can you expect from life in Argentina? What kind of budget will you need to survive? What services and facilities are available?
Where is Argentina
Before we move on to the cost of living in Argentina it is worth while confirming the country’s exact location and its position in the South American pecking order. The country of Argentina is the second largest in South America, the eighth largest in the world and one of the largest economies in South America. The country borders Paraguay, Bolivia, Brazil, Chile and Uruguay and is also in very close vicinity to the Atlantic Ocean. The country itself has issued a number of claims over various other areas of the world including the Falkland Islands and areas of the Antarctic which have been disputed by a number of governments around the world.
The country itself has a population of just over 40 million and covers just over 2,700,000 km² although the climate, both the weather and economic climate, do vary markedly across the region. The country itself is one of the founder members of the United Nations and one of the leading G-20 economies, giving the Argentinian authorities a place at the top table of the international arena.
The performance of the Argentinian economy has been very volatile time to say the least over the last 100 years although the country itself has masses of natural resources, a well-educated population, a diverse industrial base as well as a very well tuned export sector. While the economy made much progress in the 1990s it did fall back in early 2000 although the introduction of new policies and investment in the commodity export arena led to a significant recovery in GDP. Between 2003 and 2007 the economy grew by an average of 9% each year and while this did fall back to around 7% in 2008, this is still a very impressive performance.
There have been a number of difficult periods during the development of the Argentinian economy although a loosening of the regulatory burden has seen an increase in overseas investment in the region and an increase in overseas visitors. Like so many other South American countries, Argentina does tend to depend quite heavily on exports and new investment from overseas investors although thankfully these particular areas of the economy of very buoyant. There has been significant investment by recent governments which is now starting to bear fruit as the internal workings of the Argentina economy are now much more streamlined and efficient.
The Argentina property market had a very difficult 2009 with a reduction in transactions in and around Buenos Aires, the capital of the country, between January and October 2009 of over 20%. However, surprisingly house prices remained fairly steady during this period with very little evidence of panic selling which did surprise some experts. Thankfully many experts believe that 2010 will be a much better year for the property market in Argentina, a market which has seen rents nearly quadruple over the last 30 years. While the increase in rental values has been fairly volatile, as has been the average house price in Argentina, there’s no doubt that a more buoyant and stronger economy is now beginning to bear fruit for the Argentina property market.
Like so many other countries, the Argentina economy saw a reduction in GDP of about 2% last year although it is expected to rebound to plus 2% this year and rise to around 3% in 2011. Against this background it looks as though property in Argentina will become more popular and demand is set to gradually increase in the latter part of 2010 and 2011. There have been various over issues in the region such as the bird flu outbreak which saw a collapse in tourism to South America and many other areas of the world. While the Argentina economy has a number of different outlets and different facilities available there is no doubt that tourism, as with so many other up-and-coming South American countries, is set to play a major role in the future.
Cost of food
There are a number of very useful indexes available comparing Argentina, the cost of living in the country, against areas such as New York. If you compare the cost of living in New York to the cost-of-living Argentina in US dollars it is evident that the consumer price index is half of that in New York, rent index is around a fifth, the groceries index is around 60% less, the restaurant index is also around 60% less and it becomes obvious that the cost of living in Argentina is relatively cheap compared to the likes of the US. But what can you expect to pay for goods on the ground?
A meal at a relatively inexpensive restaurant in Argentina will cost you around £4 for one person with a midrange restaurant costing in the region of £18 for two people. When you consider the cost of for example domestic beer is around £1 for a half litre draft, imported beer about £2 for a 0.33 litre bottle and Pepsi cost in the region of 60p a bottle it becomes evident that it can be relatively cheap to live in Argentina. When you also consider that local markets can provide one litre of milk at the cost of 60p, 12 eggs at around 90p and a bottle of mid range wine at £3 it is easy to see why a growing number of expats are attracted to religion.
As we have touched on above, entertainment in Argentina can be relatively cheap compared to countries such as the US and the UK although you would expect to pay more if you were out and about in the major cities such as the capital Buenos Aires. While the expat community in Argentina may not be as prominent and as influential as those seen in other South American countries there is no doubt that it is on the radar of many people looking to start a new life overseas.
Tourism has played a major part in the recovery of the Argentina economy and will play a major role going forward. As a consequence, services aimed at the European market will continue to grow and we should see an increase in overseas investment going forward. Whether the ongoing conflict with the UK authorities will impact upon the number of UK expats moving to Argentina remains to be seen as the issue with the Falkland Islands continues to grab the headlines.
Thankfully the transport network in Argentina is amongst one of the most developed in the world and indeed the country was the first to have a subway system in South America which has received significant investment from the government. There are over 230,000 km of roads, 9.5 million motor vehicles, a rail network extending over 34,000 km, 11,000 km of waterways as well as an extensive airport network. The cost of internal and external travel in Argentina is very reasonable and the investment many years ago by the former Argentina governments has proved very beneficial for the country and especially the economy. This extended transport network has allowed inward investment and overseas investment to pour into the country thereby creating a larger economy and new employment opportunities.
The basic income tax rates in Argentina are as follows, ARS 0 to ARS 10,000, 9%, ARS 10,001 to ARS 20,000, 14%, ARS 20,001 to ARS 30,000, 19%, ARS 30,001 to ARS 60,000, 23%, ARS 60,001 to ARS 90,000, 27%, ARS 90,001 to ARS 120,000, 31%, ARS 120,001 and above attract a tax rate of 35%. There are other taxes in relation to personal assets which are held within Argentina such as property, leases, rental income, etc.
The flat rate of corporation tax in Argentina is 35% and this relates to companies which are incorporated in Argentina or foreign companies domiciled in Argentina. Companies in Argentina are liable to tax on all of their income worldwide while non-resident companies need only pay tax on their Argentina income. There are also a number of regional taxes including turnover tax, stamp tax, land and car taxes, and rates which will vary across the country. On the whole, the overall taxation environment in Argentina does reflect favourably compared to the vast majority of developed economies around the world.
While it would be wrong to suggest that there are not a number of UK expats living in Argentina, there is no doubt that the current numbers have been affected by ongoing issues regarding the Falkland Islands. However, this has not stopped expats from other regions of the world moving to Argentina to take advantage of an economy which appears have found its feet and seems relatively well-positioned for the future. While inflation is an issue which the expat community will need to be aware of it would seem that the country is set to attract more and more expats to the region in years to come.
While there is no doubt that the capital of Argentina continues to attract the attention of visitors to the region and overseas investment, Argentina is of a size whereby there are other prominent cities apart from Buenos Aires. It was interesting to see that property values in Argentina remained fairly static throughout the worldwide recession even though countries such as the UK saw a significant reduction in average property prices.
Yet again, in common with many South American countries, Argentina appears to be moving towards a relatively buoyant and a potentially lucrative stage of the country’s development. However, there are still niggling doubts with regards to UK expats looking to move to the region with problems regarding the Falkland Islands and recent issues which need to be addressed between the two governments. However, putting the Falkland Islands issue aside there is no doubt that the cost of living in Argentina is relatively low compared to the UK and the US. But will this be enough to attract overseas visitors?
When you take into account the relatively low cost of living as well as the relatively “light” taxation system in Argentina it is easy to see why many people believe Argentina could become a more prominent destination for expats in the future. The potential is there, the infrastructure is there, the political stability has been there for some time and the economy is starting to live up to hopes for the future. Against this background we are likely to see more and more overseas investments in the region which would bring in more overseas employees and employers.
Like so many South American countries, often tarred with the same brush of political instability and economic volatility, Argentina today is very different to the Argentina of 20 years ago. The Argentinian story has not finished as yet and there is still much work to be done but progress has been made and continues to this day. Inflation has been an issue the past, and will obviously have a major impact upon the cost-of-living in Argentina, but the government seems to be determined to balance off inflation and economic growth.
All in all, a move to Argentina may not be as far-fetched as many might assume and may actually turn out to be fairly lucrative and a relatively inexpensive venture.