El Salvador: Economic Outline

Economic Indicators

El Salvador ’s economy experienced a moderate but constant growth rate (about 4%) in the last years, mainly due to the remittances from the Salvadorans living abroad. Nevertheless, the country has been hit by the effects of the global economic crisis because of its direct link with the United States. Its economic growth was negative (-3.5%) in 2009 and in 2010 it came out of the crisis with only a sluggish growth (1%). This should accelerate in 2011 with a rate of around 2.5%.

A small country, El Salvador has little in terms of natural resources. The agricultural sector employs 19% of the workforce and represents 11% of the GDP. The manufacturing sector contributes 30% of the GDP. Together with Guatemala, El Salvador is the most industrialized country in Central America and is especially known for its textile, metal and pharmaceutical products. The country also specializes in food processing and heavy industry. The services are also highly developped, making El Salvador a relatively diversified economy.

In order to face the crisis, the government has requested financial aid from the IMF and has adopted a program aiming to keep sustained fiscal and financial conditions (the country adopted the US Dollar as its national currency in 2001), it also expects to catalyze the resources from private and multilateral sectors, and to sustain contra-cyclical policies meant to boost demand. This program will also allow to level the social impact of the crisis introducing a universal social protection system.

El Salvador belongs to the lower scale of countries of average income, 48% of the population lives under poverty line, income inequality is very high, the unemployment rate maintained at 6% hides a substantial under-employment, and the high level of crime and violence is a disadvantage to the country.

Main Indicators	2009	2010	2011	2012 (e)	2013 (e)
GDP (billions USD)	20.66	21.22e	22.62	24.34	25.84
GDP (Constant Prices, Annual % Change)	-3.1	1.4e	2.0	2.5	3.0
GDP per Capita (USD)	3,548e	3,618e	3,831	4,094	4,317
General Government Gross Debt (in % of GDP)	48.3	50.3	49.9e	49.3	48.7
Inflation Rate (%)	0.4	1.2e	4.6	4.9	2.9
Current Account (billions USD)	-0.30	-0.49	-0.86	-0.85	-0.85
Current Account (in % of GDP)	-1.5	-2.3	-3.8e	-3.3	-

Source: IMF - World Economic Outlook Database - Last Available Data.

Note: (e) Estimated Data

Monetary Indicators	2008	2009	2010
Foreign Debt (million USD)	10,111	11,384	-
American Dollar (USD) - Average Annual Exchange Rate For 1 USD	8.75	8.75	8.75

Source: World Bank - Last Available Data.

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Main Sectors of Industry

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	18.0	23.4	58.6
Value Added (in % of GDP)	12.6	28.7	58.7
Value Added (Annual % Change)	-0.1	3.3	1.4