Argentina receives more dollars from abroad than are sent

RIO DE JANEIRO, BRAZIL – Historically in Argentina, an average worker used to generate enough pesos to be able to buy a handful of dollars, which he then sent to relatives living abroad. It was always like this. Until the pandemic. Since 2020, this trend has been reversed and has never been the way it was: today those who live abroad are the ones who send foreign currency to the country -as remittances- to collaborate with their devalued relatives.

The abrupt fall in the real average salary in recent years, the acceleration of inflation, the sustained devaluation and the increase in the gap that separates the official dollar from the parallel ones explain this phenomenon that illustrates the impoverishment of the working middle class.

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During the first year of Mauricio Macri’s administration, remittances grew by 65% ​​as a result of the elimination of the exchange trap, while 35% came to complete the income of Argentine families.

In 2017 the trend continued: the dollar remained stable, inflation fell and wages recovered. This combination explains why 73% of the dollars converted into remittances left Argentina, while only 27% entered. In 2018 there were two devaluations that doubled the price of the dollar, but even so, 67% of foreign currency was sent and 33% entered.

A new trap was implemented in 2019 and during that electoral year, in which Alberto Fernández gathered the votes that consecrated him president, the equation was tied: 50% of the foreign currency left and another 50% arrived. Unemployment rose, purchasing power fell, the price of the dollar doubled, and inflation shot up.

In 2020 the pandemic broke out and with the Covid came more restrictions and obstacles to financial, banking and foreign exchange operations. Remittances fell to 34%, but receipts from abroad rose to 66%. An image that had not been seen until now.

Last year, due to the scarcity and increased cost of dollars, Argentines sent 26% of foreign currency abroad and locals received the remaining 74% from abroad.

According to the economist Anabel González Chiara, “the purchasing power of the average registered salary comes with a negative trend. The 2021 records showed a 10% drop compared to 2012 salaries.”

For the specialist of the CABA Employment Observatory, “on the issue of remittances, not only does the fall in salary deflated by inflation impact, but the biggest problem is the loss of the purchasing power of that salary measured in dollars. In 2021, recorded a fall of 20 points with respect to the purchasing power of real wages in 2011”.

The other side of the analysis is provided by the economist Federico Favata: “Remittances from abroad grow because for an average Argentine it is preferable to work abroad and obtain income in dollars. Local wages in dollars are considerably lower than a part-time income anywhere in the world”.

According to the econometrics specialist and data scientist at the National University of San Martín (UNSAM), an example of this trend is the massive hiring of Argentine programmers by foreign companies operating abroad. Rubén Galindo Steckel, CEO of AirTM, tells El Cronista that in the last seven years he has observed many changes in the patterns of money used for remittances in Latin American countries.

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