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El Salvador El Salvador

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El Salvador

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EconomicPoliticalStructural

El Salvador – Quick View
ECR score45.16 (Mar 2011)
ECR rank82 (Mar 2011)
Economic
GDP 2010, (till Q3)USD 16.35 billion
GNI per capita PPP, 2009USD 6,420
FDI inflow , 2009USD 7,132 million
Inflation, 20102.13%
Central bank assets, 2009USD 4,401.25 million
Government deficit, 2010USD 562.6 million
Tax revenue, 2010USD 2,881.6 million
Political
Government typeDemocratic Republic
Recent political crisisNA
Economic freedom score, 201139th
Freedom of information score 201051st
Corruption perception index, 201073rd
Structural
Birth rate20.4 per ‘000
Population balanceNA
Life expectancy yearsMale - 66.45 years
Life expectancy yearsFemale - 75.89 years
Mortality rate6.71 per ‘000
Literacy rate, 200987%
Internet access152,670 subscribers

[Top] Economic Overview

The country has an open market economy. The United States is the main trading and investing partner of the country, contributing to 48% of its exports, and 34% of imports. Remittances are a major part of the revenue of the country. In 2010, USD 3,539.4 million of remittances were collected.

(Sources: Embassy of El Salvador, fas.org)

Gross domestic product (GDP)

Gross Domestic Product in 2010 (till Q3) amounted to USD 16.35 billion, marking an increase of 2.4% as compared to previous year till the same period.

El Salvador Gross Domestic Product (USD billion)

(Source: Central bank)

Gross national income (GNI)

Gross National Income amounted to USD 20,785 million in 2009, with a decrease of 1.9% as compared to the previous year. The GNI per capita PPP, was USD 6,420 in 2009, as compared to USD 6,680 in 2008.

(Source: World Bank)

Income tax rate

Income tax rate is progressively charged, with a maximum of 25% in the nation. The corporate tax rate and VAT imposed were 25% and 13% in 2010 respectively

Tax Rates

Taxable Income

Tax

0 – 2,514.29

Exempted

2,514.29 – 9,142.86

10% over 2,514.29 + USD57.14

9,142.86 – 22,857.14

20% over 9,142.86 + USD 720

Above 22,857.14

30% over 22,857.14 + USD 3,462.86

(Source: taxrates.cc)

Inflation rate

Inflation rate in 2010 was recorded at 2.13%. Similarly, the inflation rate in January and February 2011 was recorded at 2.3% and 2.4% respectively.

(Source: central bank)

El Salvador Inflation rate (%)

 

(Source: central bank)

Foreign direct investment (FDI) inflow

Foreign Direct Investment amounted to USD 7,226 million in Q3 2010, as compared to USD 6,878.7 million in Q3 2009.

El Salvador Foreign Direct Investment (USD million)

(Source: central bank)

Portfolio investment

Portfolio investment in Q3 2010 was USD 2,645.8 million, as compared to USD 2,170.3 million in the same period in 2009, making a growth rate of 21.9%.

Portfolio Investment (USD million)

Year

2010

(till Q3)

2009

2008

2007

2006

Portfolio Investment

2,645.8

2,586.3

2,179.1

2,244.3

2,357.6

(Source: central bank)

Banking sector assets

The total central bank assets in 2009 were USD 4,401.25 million, compared to USD 4,081.35 million in 2008.

Banking Sector Assets, 2009 (USD million)

Availability

884.12

Gold and Foreign investment (net)

1,991.95

Loans and Receivables

289.11

National Security Investments

704.44

Contributions to National institutions

138.83

Contributions to International institutions

365.51

Immovable and movable

16.87

Other assets

10.42

Total Assets

4,401.25

(Source: central bank page: 69)

[Top] Financial Indicators & Government Financial

Consumer price index

Consumer Price Index was registered at 102.77 in January 2011, with an increase of 2.3% from January 2010.

El Salvador Consumer Price Index

(Source: central bank)

Wholesale price index

The wholesale price index was recorded at 651.07 in December 2010, making an increase of 7.1% from the previous year.

El Salvador Wholesale Price Index

(Source: central bank)

Interest rate on savings deposits

Time Period

Savings Rate (%)

30 days

60 days

90 days

120 days

150 days

180 days

360 days

Jan-11

1.73

1.67

1.71

1.34

1.89

1.7

1.82

Dec-10

1.82

1.79

1.78

1.46

1.7

1.8

1.94

Nov-10

2

1.88

2.04

1.85

2.1

2.1

2.37

Oct-10

2.27

2.39

2.28

2.07

2.3

2.3

2.59

Sep-10

2.47

2.65

2.36

2.28

2.3

2.6

2.87

Aug-10

2.58

2.68

2.50

2.54

2.6

2.8

3.06

Jul-10

2.64

2.72

2.58

2.63

2.83

2.93

3.2

Jun-10

2.6

2.78

2.69

2.73

2.78

2.98

3.22

May-10

2.7

2.84

2.77

2.83

2.71

3.1

3.29

(Source: central bank)

Money supply

The quasi money and broad money M3 was USD 9,537.4 million in December 2010. The narrow money M1 was USD 2,392 million and money supply M2 was USD 8,815.2 million.

El Salvador Money Supply (USD million)

(Source: central bank)

Government expenditure

In 2010, the total government expenditure was estimated at USD 4,532.7 million, with an increase of 3.4% from the previous year.

Total Government Expenditure (USD million)

Year

2010

2009

Current Expenditures

3,855.6

3,743.3

Capital Expenditures

677.6

643.1

Net Lending Concession

-0.5

-0.9

Total Expenditure

4,532.7

4,385.5

(Source: central bank page: 25)

Public debt

The total public debt was USD 11,778.3 million in 2010, making an increase of 5.4% from 2009.

Total Public Debt (USD million)

Year

Public Debt

2010

11,778.3

2009

11,173.50

2008

9,723.60

2007

8,652.40

2006

8,374








 

 

 

(Source: central bank)

Exchange rate

USD is the  current currency of El Salvador since 2001. The exchange rate Colon 8.75 per USD in the country has been fixed since January 2001.

(Source: central bank)

Government finances

Fiscal balance

The fiscal balance registered an increase in deficit from USD 50.2 million in 2007 to USD 801.5 million in 2009. However, in 2010 it recovered by USD 238.9 million reaching a deficit of USD 562.6 million.

El Salvador Fiscal Balance (USD million)

(Source: central bank page: 25)

Total revenues

The total revenues collected in 2010 was USD 3,213.3 million, making an increase of 12.5% from 2009. The total tax revenues and non-tax revenues amounted to USD 2,881.6 million and USD 188.6 million respectively in 2010.

Total Government Revenues (USD million)

Year

2010

2009

Income

994.8

949.2

Transfers of Property

16

13.4

Imports

151

138

Good Consumption

119.3

99.7

VAT

1432.8

1251.2

Others

98.7

89.7

Special Contributions

69

68.1

Assets Revenues

3.8

3.3

Transfers from Public Enterprises

24.7

25.3

Sale of restricted articles

29.8

8

Tariff and duties for public services

28.7

28.6

Fines and others

101.7

99.1

Assets Sale

0.2

0.1

Grants

142.8

83.5

Total Revenues

3,213.3

2,857.2

 

 

 

 

 

 

 

 

 

(Source: central bank)

Tax revenue

The total tax revenue was USD 2,881.6 million in 2010, making an increase of 10.4% as compared to the previous year.

El Salvador Tax revenue (USD million)

(Source: central bank)

Tax Revenues (USD million)

Year

2010

2009

Income Tax

994.8

949.2

Property Tax

16

13.4

Custom Duties

151

138

Consumption Tax

119.3

99.7

Value Added Tax

1,432.8

1,251.2

Special Contribution

69

68.1

Others

98.7

89.7

Total Tax Revenues

2,881.6

2,609.

 

 

 

 

 

 

 

(Source: central bank page: 27)

49.7% of the total revenues were collected from Value Added Tax, followed by 34.5% of revenues from income tax. Additonally, minor contribution to revenues came from property tax and special contributions.

Total grants

The total grants received by the country was USD 164.4 million in 2010, making an increase from USD 108.7 million in the previous year. Similarly, the foreign grants increased by 51.2% in 2010.

(Source: central bank page: 25)

Current account balance

The current account balance witnessed a deficit from 2007 to 2010, with 2008 registering the highest deficit of USD 1,681.90 million. In 2010 (till Q3), the deficit was USD 269.3 million.

El Salvador Current account balance (USD million)

(Source: central bank)

Balance of payments

El Salvador’s Balance of Payments (USD million)

Year

Trade in goods

Trade in services

Total Trade

Income

Current Transfers

Current Account

Capital Account

2010 Q3

-2452

-315.4

-2767.3

-312.7

2810.7

-269.3

164.5

2009

-2845.2

-425.1

-3270.3

-663.8

3560.6

-373.5

130.2

2008

-4393.6

-584

-4977.6

-536

3831.7

-1681.9

79.8

2007

-4104.6

-290.5

-4395.1

-576.1

3749.9

-1221.3

150.5

 

 

 

 

 

 

 

(Source: central bank)

[Top] Labour Force and Employment Overview

Labour force

The total number of people employed in 2008 and 2009 were 2,364,579 and 2,349,050 respectively. In 2010, the total economically active population was 3,296,000 people, of which, the total male and female active population were 1,993,000 and 1,304,000 respectively.

(Source: National Statistics , eclac.org page: 38)

Labour force participation rate

The labour force participation rate was 65% in 2010, and is projected to be 67.9% by 2020. The participation rate for males and females was registered at 81.2% and 49.8% respectively.

(Source: eclac.org page: 39)

Unemployment rate

In 2009, unemployment rate was registered at 7.1% as compared to 5.5% in the previous year. The urban unemployment rate for 15-24 year olds was 15.5%, for 25-34 year olds it was 7%, for 35-44 year olds it was 5.1% and for above 45 year olds it was 3.5%.

In the same year, the unemployment rate for males and females was recorded at 9.1% and 4.9% respectively.

(Source: eclac.org page: 47)

El Salvador Unemployment rate (%)

(Source: eclac.org page: 46)

Employment in agriculture

The total employment in agriculture increased to 21.3% in 2009.

(Source: eclac.org)

El Salvador Employment in agriculture (%)

(Source: eclac.org)

Employment in industries

The total employment in industries was registered at 20.5% in 2009.

El Salvador Employment in Industries (%)

(Source: eclac.org)

Employment in services

The total employment in services was recorded at 58.2% in 2009.

El Salvador Employment in Services (%)

(Source: eclac.org)

Minimum wage

The monthly average minimum wage in 2009 was USD 126.1.

(Source: central bank)

Level of unionisation

The unions in the country are:

  • Salvadoran Workers Central (C.T.S.)
  • Federation of Independent Unions or Associations of El Salvador (FEASIES)
  • General Labor Confederation (CGT)
  • Confederation of Workers of El Salvador. (CUTS)
  • Democratic Central of Workers (CTD)
  • National Confederation of Workers Salvadorans. (C.N.T.S.)
  • General Confederation of Trade Unions (CGS)

(Source: ilo.org)

[Top] Political Stability

Government stability

El Salvador is a democratic republic.  The country has 14 departments and 262 municipalities, which are governed by mayors elected for a three years.

The government is comprised of executive, legislative and judiciary branches.

The executive branch consists of the President as the head, as well as the Vice-President, the cabinet of secretaries, the superintendants and 14 ministries. The President is elected for five years.

The parliament is a unicameral legislature consisting of 84 members elected by universal suffrage. The members serve a term of three years. The main function of the legislature is to interpret, amend and repeal laws. It also elects the President, the Judges of Supreme court, the Attorney General's Office and the members of National Judicial Council etc.

(Source: ipu.org, legislative)

The major political parties in the country are

  • Frente Farabundo Marti para la Liberacion Nacional (FMLN)
  • Nationalist Republican Alliance (ARENA)
  • Grand Alliance for National Unity
  • National Conciliation Party (PCN)
  • Christian Democratic Party (PDC)
  • Democratic Change (CD)

(Source: legislature)

Regulatory environment

El Salvador Economic Freedom Index

(Source: heritage.org)

El Salvador’s economy is the 39th freest in 2011 Economic Freedom Index with a score of 68.8. The nation ranks 4th out of the 29 countries in Latin America and Caribbean region.

Corruption perception

The Corruption Perceptions Index (CPI) is a survey to measure the perceived level of corruption across countries worldwide. El Salvador is ranked 73rd on the Corruption Perception Index (CPI) with a score of 3.6 in 2010.

(Source: transparency.org)

Freedom of information

In 2010, the World Press Freedom Index ranked El Salvador at 51st, with a score of 15.83. This indicates that the country’s media is free to criticise the government.

(Source: rsf.org)

Newspapers

The important newspapers across the country are La Prensa Grafica, El Mundo, El Diario de Hoy, and El Diario Co Latino.

(Source: BBC)

Judicial system

The judiciary system in the country is independent. It is comprised of the Supreme Court, the courts of second instance as well as other courts. The Supreme Court is the highest court of appeal, consisting of 15 magistrates. Additionally, it is comprised of 4 civil courts, a penal court, a constitutional court and an administrative contentious court.

(Source: csj.gov, Embassy of El Salvador)

[Top] Demographic Overview

Total population

The total population was 6.15 million in 2009, making an increase of 0.5% from the previous year. The population was estimated to be 6.18 million in 2010, and is further projected to reach 6.37 million by 2015.

El Salvador Population (million)

E=estimated

(Source: central bank, census.gov page: 40)

Gender balance

Gender balance in the country is equal. The total male and female population in 2010 was estimated to be 2.91 million and 3.27 million respectively.

(Source: census.gov page: 40)

El Salvador Population by gender, 2010 (%)        

Mortality rate

The infant mortality rate for males and females from 2005 to 2010 was 22.98 and 18.10 respectively. From 2010 to 2015 infant mortality rate is projected to be 20.90 for males and 16.30 for females. The birth rate was expected to be 20.4 births per thousand in the period between 2005 to 2010 and was further projected to decline in the period of 2020 to 2025 to 18.55 births per thousand individuals.

(Source: census.gov page: 19)

El Salvador Birth and Death rate

(Source: census.gov page: 34)

The death rate was estimated to be 6.71 deaths per thousand individuals from 2005 to 2010 and is projected to increase to 7.12 deaths per thousand by 2020-2025.

Average life expectancy

Life expectancy in El Salvador was recorded at 72 years in 2010. The average life expectancy for males is 66.45 years and for females it is 75.89 years.

(Source: UNDP, census.gov page: 20)

Migration and urbanisation

The total urban population is estimated to be 3.95 million, accounting for 63.9% of total population. Alternatively, the rural population is estimated at 2.23 million, contributing 36.1% to the total population.

 

Year

Population (million)

Urban

Rural

Male

Female

Male

Female

2020E

2.16

2.52

0.92

1

2015E

1.98

2.31

0.99

1.07

2010E

1.83

2.12

1.08

1.15

2005

1.7

1.94

1.17

1.23

2000

1.57

1.77

1.27

1.31

(Source: National Statistics page: 17)

The net migration was estimated to be 27, 9710 between 2005 and 2010, and 22, 3430 between 2010 and 2015.

(Source: census.gov page: 27)

Poverty and inequality

In 2009, there were 1,548,108 total households, of which 11.99% of households were classifed as extremely poor, and 62.24% of total households were not under poverty.

Year

Total Households

Extreme Poverty (%)

Relative Poverty (%)

No Poverty   (%)

2009

1,548,108

11.99

25.77

62.24

2008

1,529,483

12.4

27.55

60.05

(Source: National Statistics)

Human development index (HDI)

El Salvador is ranked 90th on the Human Development Index (HDI) with a score of 0.659. The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income).

(Source: UNDP)

[Top] Soft Infrastructure

Literacy rate

Primary education is compulsory for all students between 7 and 15. The literacy rate for people between 15 and 24 was registered at 96%, and finally for those aged 25 to 59 was 87% in 2009.

(Source:  Ministry of Education page: 15)

Education resources

Education in the country is is divided into formal and informal sections. Formal education is comprised of four levels: pre-primary, primary, secondary and higher education. It is mandatory for an individual to complete nine years of schooling.

(Source: UNESCO)

 

Enrolment in Institutions

Levels of Education

Net Enrolment ratio, 2009 (%)

Pre-primary

64

Primary

96

Media

42

Higher

25

(Source: Ministry of Educationpage: 15)

 

 

The education expenditure was 3.6% of the total GDP in 2008.

(Source: CEPAL page: 37)

 

Healthcare resources

Health expenditure in 2009 was USD 851.3million, makking an increase of 7.3% from the previous year. The total public health expenditure, as a percent of GDP, was 4% in 2009, and 3.6% in 2008. Public expenditure on health per capita was USD 138 in 2009, with an increase from USD 130 in 2008.

(Source: Ministry of Health)

 

Year

Total deaths under 5 years of age-group

Age 0-1 years

Age 1-4 years

2000- 2005

15,039

1,851

2005- 2010E

12,853

938

2010- 2015E

11,751

892

 

 

(Source: census.gov page: 57)

 

The major causes of death in children are chronic malnutrition, anaemia, prematurity as well as other micro-nutrient deficiencies.

(Source: WHO)

[Top] Hard Infrastructure

Mass public transit

Mass public transport is primarily by bus, car and railways.

 (Source: Embassy of El Salvador)

 Ports

El Salvador consists of only three ports: Port of Acajutla, Port of La Union and Port of La Libertad.

(Source: worldportsource)

Airports

Town

Airport Name

Runway length (ft.)

Casa Nuevas

Casa Nuevas

3,200

El Papalon

El Papalon

3,100

El Playon

El Playon

3,200

La Bomba

La Bomba

3,600

La Carrera

La Carrera

3,000

San Salvador

El Salvador International

10,500

San Salvador

Ilopango International

7,300

Santa Rosa De Lima

Santa Rosa De Lima

3,000

 

 

 

 

 

 

 

(Source: aircraft charter)

 Telecommunications network

Telecommunications Network

Sector

2010

2009

Internet

Total Subscribers (‘000)

152.67

140.32

Fixed-lines in service

Total Subscribers (‘000)

1,003.01

1,137.34

Mobile Telephony

Total Subscribers (‘000)

7,456.07

7,445.04

(Source: siget.gov)

In 2010, internet subscribers increased by 8.8% from the previous year, amounting to 152,670 users. Alternatively, the fixed-line subscribers decreased by 11.81% and mobile telephony subscribers decreased by 0.15%.

El Salvador mobile and telephone users growth rate (%)

 

(Source: siget.gov)

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