Photo via El Territorio

According to some reports, Paraguay has become the new ‘mecca’ for Argentine shoppers, drawing people in the thousands away from the steeper prices seen in their local shops and although this means happier customers, this isn’t great news for Argentina’s economy…

What’s the fuss about?

For the most part, in the case of Argentina and other countries like Brazil, it’s partially a question of exchange rates. Whereas in Paraguay, according to Fernando Vely – head of the Posadas Chamber of Commerce (CCP): Shop owners “don’t have the same costs, they pay far fewer taxes, and the ones that they do pay; are handled very informally and everything is imported duty-free.”

Just as an example of the benefits shoppers can reap from making the trip to Paraguay, a woman named Isabel Acosta stated that she can buy a cell phone there for AR $2100 and is able to sell it in Buenos Aires for AR $3500.

However, Acosta isn’t alone in her thinking and in fact a whopping 20,000 people reportedly cross the Roque González de Santa Cruz bridge every single day, totalling up to more than 10 million this year. Filling the shopping baskets of these avid bargain-hunters are largely technology and electronics, footwear, car tires, fuel, or simply just food from supermarkets.

Just in the past few days, Posadas – the capital of the Argentine province of Misiones – saw huge queues beginning to form, some of which stretched 8 kilometers. The rail service in the neighboring city of Encarnación was overwhelmed by the demand of thousands of travelers, who waited up to three hours to get a ticket of the 240 available on each trip that goes every 15 minutes.

Puerto Iguazú was also witness to a similar situation, where thousands of tourists were wanting to travel to the Brazilian city of Foz de Iguazú over the international bridge Tancredo Neves, in order to take advantage of the difference in exchange rates.

In both Posadas and Iguazu, it took an average of 3 hours for anyone to re-enter into the country.

Unfortunately for the Argentine city of Posadas in particular, however, this isn’t good news; with the CCP reporting that they lose up to 800 million pesos to Paraguay’s Encarnación in sales, which in turn adds to the crisis of mass business closures – with around 300 closing in Posadas this past year alone. Not only that, but according to Indec, unemployment has risen from 3.4% at the end of 2015, to 5.1% in the second trimester in the area.

And by the looks of it, there aren’t any signs of slowing down. President Macri announced last year a lowering of the ITC (tax on the transfer of fuel), which will lower the price for six months. However, that promise is more than a year overdue and has still not been implemented. That being said, even when it is put into effect, many agree that it won’t be enough to put a cap on the hordes of people who cross over to Paraguay for end-of-year purchases.