Economic conditions have improved significantly in recent months. The performance of the US and many parts of Asia has been particularly strong during 2004 and sustainable recovery is expected to continue over the next few years. The prospect that this recovery can be sustained over the next few years is now at its strongest since the global downturn began in the middle of 2000.
El Salvador’s economy hosts one of the most stable integrated economies in Latin America. Its attractive and dynamic business environment is the result of a policy-driven strategy that has focused on building sound macroeconomic fundamentals and strong institutions, promoting competition and international integration, and creating a fair, more equal society in which all citizens benefit from economic development.
Macroeconomic Fundamentals & Rankings
GDP Growth 1999 - 2004
GDP by Economic Sector 2004 Evolution of Inflation 1999-2004 Foreign Trade in Goods 1999 -2004 2005 Index of Economic Freedom - Heritage Foundation 2004 Global Competitiveness Index - World Economic Forum ES: Lowest Inflation in the Region ES: The Best Banks in Central America
* ES: The Most Stable Exchange Rate in Central America
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International Recognitions
International rankings regularly highlight El Salvador’s achievements in this field, drawing attention to the competitive advantages -including competitive costs - which El Salvador offers to businesses.
Economic Freedom
(Heritage Foundation)
El Salvador is the second freest economy in Latin America, according to the 2005 Index of Economic Freedom, published jointly by the US-based Heritage Foundation and the Wall Street Journal. (The first is Chile).
Hong Kong and Singapore led the 2005 ranking. El Salvador was placed in 24th out of 155 countries included in the ranking, just behind Ireland (5th), Chile (11th), and Germany (18th), and ahead of Taiwan (27th), Spain (31st), and France (44th).
For many years, the Index of Economic Freedom has traced the relationship between economic freedom and a country’s prosperity. The counties with the best score in the Index’s ten categories – trade policy, fiscal burden of government, government intervention in the economy, monetary policy, capital flows and foreign investment, banking and finance, wages and prices, property rights, regulation and informal (or black market) activity – tend to have higher living standards and per capita income.
Another index measuring variables related to market openness, free trade and deregulation – the 2004 Economic Freedom of the World Rating by Canada’s Fraser Institute – ranked El Salvador in 27th place out of 123 nations, alongside Portugal and Panama.
Competitiveness Index
(World Economic Forum)
Free market policies and export-led growth have shaped El Salvador as a highly competitive economy and this is regularly recognized in the rankings of independent international organizations.
In the Growth Competitiveness Ranking of the Global Competitiveness Report 2004-2005, released by the World Economic Forum (WEF), El Salvador emerged as the 4th most competitive country in Latin America, taking an overall 53rd place out of 104 economies, ahead of India (55), Brazil (57) and Panama (58), among others.
The Index, which has been published since 1979, evaluates a country’s potential for sustained economic growth and in its 2004-2005 version, was headed by Finland, United States and Sweden. The Index is divided into three sub-indexes: Macroeconomic environment, Public Institutions and Technology, in which El Salvador ranked 53rd, 46th and 69th, respectively.
As part of the same report, the WEF also publishes a Business Competitiveness Index, using the same conceptual and statistical approach. In this Index, El Salvador ranked in 65th position, ahead of Sri Lanka (68), Philippines (70) and Dominican Republic (80).