In this article, we will discuss the 15 cheapest countries to live in Central and South America. If you want to skip our discussion on the developments in the region, you can go directly to the 5 Cheapest Countries To Live in Central and South America.
There's a common perception that substantial wealth is required for settling abroad. However, the reality is different, especially for individuals earning in US dollars or Euros. In numerous Central and South American countries, the cost of living is considerably more manageable compared to the US or Europe. Throughout these regions, goods and services are priced much lower than in the United States, enabling residents to spend significantly less on a monthly basis. Central and South America offer a diverse range of living environments, from large modern cities with all major amenities to smaller, more rural areas that provide a slower pace of life. The milder climates and low cost of living make a good case for many US retirees to opt for the cheapest Latin American country to retire to. You can also check out the 15 Best Places to Retire in South America here. South America stands out as one of the more peaceful continents globally, experiencing almost no armed conflict in the 21st century. With a total population of 622 million in Central and South America, considerably less than many large Asian countries like India and China, multiple countries in the region compete for the title of the cheapest country to live in Central and South America.
Mainly dominated by the geographically and economically huge Brazil, the majority of Central and South American economies traditionally depend on trade, initially with the US and more recently with China, for their growth. According to a McKinsey report, South America has become the region with the most significant trade ties to China over the last two decades, while Central America's primary trade partner remains the US. However, both regions have yet to fully capitalize on their trade connections to achieve global economic significance. Over 50% of the region’s exports are based on primary goods. There is a lack of diversification, which has been a cause for concern for trade economists. Central and South American countries commonly export copper, soybeans, oil, petroleum, and other raw materials to China, meeting its demand for industrial growth and development. In return, these countries import value-added products. As of 2023, China has established free trade agreements with Chile, Costa Rica, Ecuador, and Peru, highlighting the interconnectedness of their economies and the potential impact of changes in China's economic landscape on the region.
According to Deloitte, the contraction of demand from the US in 2023 due to the higher interest rates set by the Fed has been a challenge for the Central and South American economies. This, combined with China's slowing GDP growth rate, is expected to impact the economic performance of the region for the 2023-24 period. Despite these challenges, the outlook remains promising, with significant potential for growth in specific sectors. Some high-growth sectors in the South American market are technology and services, with payments, logistics, and augmented reality being the most promising. Some of the major players operating within the region include Vale S.A. (NYSE:VALE), Grupo Mexico SAB de CV (BMV:GMEXICOB), and Ecopetrol S.A. (NYSE:EC).
Here's what Fairlight Capital said about Ecopetrol S.A. (NYSE:EC) in its Q3 2023 investor letter:
“Throughout the year, we have reviewed thousands of companies, including many in the oil sector. While we are generally cautious about commodity-based businesses where the company lacks control over the price of what it produces, the valuations in several cases have reached extremely compelling levels. For example, Petrobras (PBR) and Ecopetrol S.A. (NYSE:EC). Petrobras has distributed dividends of over $2.30 paid this year3 , while Ecopetrol has traded as cheaply as the $9-$10 range (close to our purchase price) and is paying approximately $2.50 in dividends this year.
15 Cheapest Countries To Live in Central and South America
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Our Methodology
To identify the 15 cheapest countries to live in Central and South America, we relied on data from sources such as WiseVoter and LivingCost. The computation of the cost of living took into account prices for utilities, food, rent, transportation, and various other living expenses in each country. These factors collectively form a consumer basket, assuming a moderate lifestyle and average consumption. We have ranked the cheapest countries to live in Central and South America in ascending order of their monthly cost of living in US dollars as of 2023.
Cheapest Countries to Live in Central and South America
15. Costa Rica
Cost of Living: $893
Costa Rica is one of the more politically stable countries in Central America. It compares positively to its neighbors in most areas of social development. The country uses its terrain of jungles, forests, and coastlines to cultivate an active ecotourism industry. It is 2.16 times cheaper to live in Costa Rica than in the United States.
14. Chile
Cost of Living: $840
Chile is a South American country with an open market economy that is based on its natural resources. The primary industries are mining, agriculture, and fishing. Compared to the rest of South and Central America, Chile ranks higher in both social development and earnings. It is 2.23 times cheaper to live in Chile than in the United States.
13. Belize
Cost of Living: $840
Belize is a South American country with a developing free market economy, primarily driven by its natural resources. While the economy historically relied on agriculture, significant restructuring has occurred since the 1990s. Currently, services-based activities dominate the economic landscape. Tourism is the major source of foreign income in the country. It is 2.67 times cheaper to live in Belize than in the United States.
12. Guyana
Cost of Living: $838
Guyana's main assets are its natural resources, such as rainforests, sugarcane, rice, bauxite, and gold reserves. The country has remained economically weak, even though oil fields have been discovered near its shoreline. It is 2.71 times cheaper to live in Guyana than in the United States.
11. Honduras
Cost of Living: $771
Honduras, the second-largest country in Central America, has attracted multiple US companies that have established banana plantations and contributed to the country's infrastructure development. The protection needed for US interests has resulted in a long history of US military intervention in Honduras. Honduras is still one of the poorest countries in Central America and faces both corruption and crime. Coffee, textiles, and palm oil are its major exports. It is 2.86 times cheaper to live in Honduras than to live in the United States.
10. Venezuela
Cost of Living: $762
Venezuela is in South America and administers some Caribbean islands, like Margarita Island, La Blanquilla, La Tortuga, Los Roques, and Los Monjes. The country has transformed from an agrarian economy to an urban one due to the discovery of petroleum reserves. The rate of urban poverty in Venezuela is high, coupled with international debt and prevalent corruption in government agencies.
9. Ecuador
Cost of Living: $750
Ecuador's economic development has been significantly influenced by the discovery of oil. Revenue generated from oil has facilitated progress in areas such as education and health. Living in Ecuador is approximately 2.97 times cheaper than living in the United States.
8. Bolivia
Cost of Living: $703
Bolivia, a landlocked country in South America, has an economy that is predominantly agriculture-based, with extensive forests and reserves of natural resources, including minerals and hydrocarbons. It is a major miner of tin and gold. The country’s social indicators, like school enrollment and life expectancy, are lower than the averages in the South and Central American regions.
7. Suriname
Cost of Living: $679
Suriname is amongst the smaller countries of South America. It is mainly reliant on its abundant natural resources and is one of the top producers of bauxite in the world. Over 80% of its land is composed of tropical rainforests.
6. Peru
Cost of Living: $672
Peru has a varied terrain with some portions of the Andes mountains, coastal plains, and dense Amazon jungle. The country holds a significant position in the global mining industry, being a major source of copper, silver, and gold. Peru has greatly benefited from the high market rates for these minerals.
Some of the notable companies operating within the Central and South American region include Vale S.A. (NYSE:VALE), Grupo Mexico SAB de CV (BMV:GMEXICOB), and Ecopetrol S.A. (NYSE:EC).
