“You can see the euphoria of the people to go shopping in Concordia”said a merchant from the center of the city of Salto with concern, who did not look favorably on the situation he would face, due to the devaluation of the Argentine peso and the opening of borders after the health restrictions due to covid-19.
A year has passed since this statement by the 61-year-old merchant and, since then, the situation has not improved in the Uruguayan coastline. Back then, the blue dollar was trading at $A195. Today, it takes more than twice that amount in Argentine pesos to buy US$1.
On this side of the border, meanwhile, merchants are trying to cope with this situation.
According to the latest data recently published by the National Institute of Statistics (INE) on the demography of companies in Uruguay, during the fourth quarter of 2022 in the department of Salto, a total of 2,626 companies were registered under the heading “Retail and wholesale businesses; repair of motor vehicles and motorcycles”.
Of that total, 1,931 are active and 695 inactive. This last figure is made up, in turn, of the sum of companies that in the last quarter of 2022 were in cessation (514), those that began the cessation (99) and those that directly died (82).
If the period between October and December 2022 is compared with that of 2021, the variation rate of inactive businesses increased by 18.8%. During the last quarter of 2021, the INE disclosed that, in that department, there were 585 inactive businesses. During that period, it is worth clarifying that there were a total of 1,819 active companies in Salto under this category. In this case, the variation rate of the active ones was also positive, although it was below the variation of the inactive ones: it was almost 6.2%.
On the other hand, when comparing the reality of the last quarter of 2020 with that of 2021, it is observed that the situation also worsens, although the variation of inactive businesses is less than 18.8%, so it was progressive. Between October and December 2020, a total of 2,232 businesses were registered: 1,673 active and 559 inactive. This gives a positive variation among the inactive of 4.7%. It is necessary to clarify that since November 1, 2021, Uruguay opened its borders for those immunized, after the restrictions due to the covid-19 pandemic, which may have affected this data.
On the other hand, the department of Río Negro presented 1,489 businesses in the fourth quarter of 2022. Of these, 1,096 were active companies in the field and 393 were active. These data, a year earlier, were as follows: 1,417 businesses in total, 1,084 active and 333 inactive. Compared, inactive companies in that department also increased by 18%while the active did so by 1.1%.
Lastly, in Paysandú during the last quarter of 2022 there were 2,338 active businesses and 745 inactive ones (total: 3,083). During the same period of 2021, the INE shows that there were 2,248 active businesses and 734 active businesses in that department (total: 2,982). Inactive businesses increased by 1.5% and active ones by 4%.
This reality shows a better situation than the other departments and, furthermore, the variation rate of inactive businesses is the closest to that of Montevideo. The capital registered a 2.5% increase in inactive businesses if we compare the numbers for the last quarter of 2022 with that of 2021. The variation in active businesses, meanwhile, was 3.1%.
the claims
Based on projections, Salto merchants expect this situation to continue for 5 or 6 more yearsexplained to Coffee & Business the president of the Commercial and Industrial Center of Salto, Vera Facchín. “This is a phenomenon of price difference with two causes: one is that Uruguay is expensive in dollars, and, on the other hand, how cheap Argentina is for us due to its macroeconomic weakness,” she added.
“The one who has a role is public policy, it has to internalize that this phenomenon is long-term and should promote changes to certain behaviors,” Facchín asserted. “The tax reductions are not bad, but it is not the way because the reduction does not guarantee that more will be sold. In the month of February alone, 124,000 people crossed the Salto Grande Bridge and 187,500 through the Paysandú Bridge,” he developed. .
The government supports a reduction in the cost of fuel at service stations near the border, which is applied in a reduction of 30% of the Internal Specific Tax (Imesi). The merchants demand that this drop be increased and reach 40%.
In this line, Facchín said: “From the Salto Shopping Center we ask that this will of the authorities crystallize quickly in that additional 10% in the reduction of IMESI, at least as a first relief for the economic and employment crisis that it is suffering. Leap”.
According to a report carried out by the Shopping Center of that department, although 70% of the merchants kept their staff, the unemployment rate in Salto reached 12.7 in December 2022; 12.9 in Río Negro and 9.4 in Paysandú. All these values remained above the average of the national rate, which in the last month of last year reached 7.9%.
“We consider that we cannot abandon this line of work of insist on a Border Policy bill and find solutions that make border cities develop and thriveas we see it today towards the southeast of the country, where companies, free zones, benefits, routes, and —I could go on—, tend to lean towards there,” he concluded in dialogue with Coffee & Business the president of the Commercial and Industrial Center of Salto.
The price difference increased
According to the latest Border Price Indicator —which was prepared by the Catholic University of Uruguay in Salto and presented in January 2023—, there is a price gap that is growing and stands at 144.1% between the cities of Salto (Uruguay) and Concordia (Argentina). The latest indicator is from November 2022 and the gap was 121.9%.
This indicator “is a numerical value that reflects the price differences of a representative basket of tradable goods between the border cities of Salto and Concordia.”
This gap has not only increased since the last measurement, but is the second highest since mid-2015. The highest was registered in July 2022 and reached 173.7%.
The category sundry goods was the one that registered the greatest difference in terms of costs on one side and the other of the Uruguay River, which reached 228.8%. This group of goods is made up of shampoo, soap, toothpaste, toilet paper. the subgroup Shampoo, conditioner, sap, hair creams registered a price gap of 328.7%. The one with the smallest gap was Toilet paperwith 118%.
The category Alcoholic beverages and tobacco was the second to register the greatest difference between the two cities (200.64%). He followed Food and non-alcoholic beverages (164.09%); Meals away from home (146.04%); Transport (126.20%); Domestic products (106.75%).
Gasoline for personal transport registered a gap of 146.8% and diesel of 191.2%. However, the Tires, tubes, covers subgroup registered a difference of -47% (ie, it is cheaper in Salto than in Concordia). This paradox is mainly due to the lack of stock of this product in Argentina, due to the increase in the cost of importing these goods and the union conflicts that this sector faces.
