Want to figure out where you should go next year in order to live it up instead of watching every dollar?
I’m no fortune teller, but the way the financial news has been rolling out this summer, it’s clear there are some trends in place that aren’t going away anytime soon. One of the (relatively) strong U.S. economy vs. the steadily weakening economies of the commodity countries. In plain English, the countries that make a large part of their income from things they extract from the ground are doing progressively worse. The ones doing better are those that depend more on tech, services, agriculture, tourism, or manufacturing.
That trend tends to have a strong impact on exchange rates. So the U.S. dollar is likely to remain strong and currencies from countries such as Brazil, Canada, Australia, Mexico, and South Africa are likely to decline more or at least plateau. Europe isn’t really a resources-based economy, but the euro is still weak because of all the financial debt struggles still lingering over many of the member countries, combined with an aging population that can’t support the generous social programs everyone has taken for granted there. So again, it’s unlikely things will turn around in the space of a year unless everyone in the world starts tripling their intake of Greek olives and Portuguese wine.
There’s been a big to-do about China devaluing its currency in the face of a slowdown, but that country’s economy is still growing 7% a year and the currency has only declined from 6.1 to 6.41 in the space of two years. Whoop-tee-do. If you had your heart set on China, it’s a good time to go, but you probably won’t see a huge difference in prices.
Here’s a rundown then on where to get the most bang for your American buck in the coming year.
The High-flyer Destinations Come out of the Clouds
For years I told anyone who would listen that Brazil was as expensive as New York City. In this 2012 post I noted that Chile wasn’t much better . Both of those formerly overpriced destinations have come crashing back down to Earth and are now worth a second look. Brazil’s economy has really tanked and the current president has an 8% approval rating. That’s not a typo! Here’s how the dollar has fared against the Brazilian real over the past two years:
Chile’s chart looks similar, with its currency declining 57% in just two years. But going there you’ll benefit from much better infrastructure, less social unrest, and good wine.
When the Australian dollar and U.S. dollar were at par, taking a vacation in the land of the kangaroos was akin to visiting Switzerland or Sweden. Now the boomerang has come back around and the Aussie dollar is at 1.40. Still no bargain, but bearable at least. Canada’s currency is flirting with its lowest level in a decade and Japan’s is down 20% against the U.S. dollar. Again, that doesn’t make either anywhere close to cheap, but as with Western Europe right now, much less stressful on your vacation budget.
If you’ve been waiting for the right time to visit a special place that’s pricey, start saving and making plans to get to one of those, New Zealand (down 18% this year), or Norway (down 10% this year).
Quality Destinations on Sale
Taking it down at notch in costs, there are two attractive destinations that have gotten walloped and are very much on sale.
One of those is Colombia, at the top of South America. Flights there usually aren’t too expensive and if you’re American you’ll find it’s gone from semi-pricey to downright affordable. That country’s currency has dropped by 2/3 against the greenback since September of 2013.
Turkey was once such a bargain that it was a featured chapter in earlier editions of my World’s Cheapest Destinations book. But then its economy and tourism numbers both went into overdrive and it got more and more expensive each year. That engine has shifted into reverse this year and the Turkish lira is down 25% in 2015 alone year to date. Your doner kebab and baklava will set you back a lot less now.
South Africa is one of the world’s main mining centers for precious metals and as commodity prices have taken a dive, so has their exchange rate. You now get almost 13 rand to the dollar, whereas two years ago you got 10.
The Travel Bargain Bin
If you’re a backpacker or just a cheapskate traveler like me, where are the best values in the world?
I’d have to put my sometimes home of Mexico high on the list. If you get away from the tourist resort areas, costs are now 1/3 less than they were two years ago. In the right spots it feels quite exotic, yet a plane ticket to there isn’t much more than a domestic flight.
Peru and Uruguay have gotten substantially cheaper, but otherwise there aren’t a lot of dramatic changes at the low end in the Americas. Many countries officially or unofficially tie their currency to the greenback. Two of them (Ecuador and Panama) actually use our money instead of theirs.
In Asia, however, it’s a different story. Thailand has gotten more reasonable, its currency down 8% this year. I’ll be heading there in October so I’ll report back on what I find compared to when I last visited three years ago. The changes have been more dramatic though in Malaysia—currency down 17% just in 2015—and in Indonesia. For more than a decade I’ve been saying Indonesia was at or near the top when it comes to travel deals and now its currency has fallen 28% since this time two years ago.
Beyond that, look to these countries that are on sale for at least 20% off at the moment and will probably stay that way for a while: Ghana, Morocco, Egypt, Bulgaria, Albania, Hungary, and Kazakhstan.
As I always say, take advantage of this while you can. These opportunity windows don’t last forever. Just ask the Canadians and Australians that were riding high a few years ago. It’ll be our turn to be glum down the road.
