El Salvador: Panorama econòmic
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In 2022, GDP grew by an estimated 2.8%, mainly due to expatriate remittances from the U.S. and higher tourism revenues, which drove private consumption. The country's main growth drivers are domestic demand and household consumption, and growth is heavily dependent on economic activity in the El Salvador’s main trading partner and source of remittances, the United States. According to updated IMF forecasts, GDP growth is expected reach 2.4% in 2023 and 1.9% in 2024.
El Salvador closed 2022 with an account deficit of 8.3%, mainly due to a slowdown in U.S. demand, a strengthening of the USD and higher commodity prices. However, that rate is expected to decrease in the coming years, reaching 5.4% in 2023 and 5.3% in 2024. Public debt stood at 77.2% of GDP in 2022 and is projected to slightly decrease to 76.1% in 2023. The inflation rate increased to 7.2% in 2022, and should slightly decrease to 4.1% in 2023 and 2.1% in 2024, according to the latest World Economic Outlook of the IMF. Bitcoin became a legal tender in El Salvador in September 2021, and has been used throughout the country since then. However, the controversial adoption of Bitcoin as a second legal tender could discourage investment in the long run. Given El Salvador's high dependency on the US economy, the country will likely see an impact from the rise in commodity prices and the slowdown in activity in the United States. However, remittances from the two million Salvadoran immigrants in the United States - that is, 20% of El Salvador's population - are an important source of income, as it represents nearly a quarter of GDP. And, with a drop in unemployment among the U.S. Latino population, these remittances should continue to increase.
Almost a third of the population in El Salvador lives below the poverty line and income inequality remains high. Moreover, the very low official unemployment rate (estimated by the IMF at 8.2% in 2022) masks substantial underemployment, as 7 out of every 10 Salvadoran work in the informal sector. Still, the IMF expects the unemployment rate to decrease to 7.5% in 2023. Other social challenges the country faces include lack of formal and social education, gang violence, and a high homicide rate, especially among young adults. El Salvador's high crime rate and extreme poverty have been driving migration to other countries in the region, as well as the United States.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 24.56 | 28.74 | 31.61 | 33.75 | 35.06 |
| GDP (Constant Prices, Annual % Change) | -8.2 | 10.3 | 2.8 | 2.4 | 1.9 |
| GDP per Capita (USD) | 3,903 | 4,551 | 4,988 | 5,308 | 5,494 |
| General Government Balance (in % of GDP) | -4.0 | -4.7 | -3.1 | -3.6 | -3.5 |
| General Government Gross Debt (in % of GDP) | 89.4 | 82.4 | 77.2 | 76.1 | 78.3 |
| Inflation Rate (%) | -0.4 | 3.5 | 7.2 | 4.1 | 2.1 |
| Current Account (billions USD) | 0.20 | -1.46 | -2.64 | -1.82 | -1.85 |
| Current Account (in % of GDP) | 0.8 | -5.1 | -8.3 | -5.4 | -5.3 |
Source: IMF – World Economic Outlook Database - October 2021.
Note: (e) Estimated Data
| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| American Dollar (USD) - Average Annual Exchange Rate For 1 EUR | 9.31 | 1.13 | 1.18 | 1.12 | 1.14 |
Source: World Bank - Latest available data.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 16.3 | 22.5 | 61.2 |
| Value Added (in % of GDP) | 4.9 | 24.0 | 59.9 |
| Value Added (Annual % Change) | 2.1 | 9.5 | 10.4 |
Source: World Bank - Latest available data.
| Socio-Demographic Indicators | 2022 | 2023 (e) | 2024 (e) |
|---|---|---|---|
| Unemployment Rate (%) | 5.8 | 5.5 | 5.5 |
Source: IMF – World Economic Outlook Database - Latest available data
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Labour Force | 2,757,134 | 2,790,598 | 2,496,445 |
Source: International Labour Organization, ILOSTAT database
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| Total activity rate | 63.08% | 62.85% | 63.15% |
| Men activity rate | 79.78% | 79.36% | 79.59% |
| Women activity rate | 49.01% | 48.93% | 49.28% |
Source: International Labour Organization, ILOSTAT database
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
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Latest Update: September 2023
