Juni 2008: Nieuwsflits El Salvador
From Handelswijzer Midden-Amerika van de Koninklijke Nederlandse Ambassade te Costa Rica
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El Salvador faces economic slowdown and increased inflation
After reaching 4.9% at end-2007 inflation will rise to 7.3% in 2008. High oil and food prices have contributes to this increase. . The current-account deficit increases to 6.8% of GDP in 2008 and will mainly be absorbed by FDI and long-term debt inflows. The economy appears to have remained on track in the early months of 2008 with the Índice de Volumen de Actividad Económica (IVAE, economic activity index) increasing by 5.9% and remittances increased by 6.9% in the first quarter of 2008. However, the Central Bank decreased GDP growth expectations for 2008 from 5% to 4%, after expanding by 4.7% in 2007, expecting inflows to decelerate due to the US recession, affecting private consumption growth, which will slow to 4% for the year as a whole, while investment growth will nearly halve, to 3.5%.
El Salvador’s population shrinks by 1,4 million
According to the 2007 census released in mid-May, El Salvador’s total population stands at 5,7 million "significantly lower than the government’s estimate (7,1 million) and that of the IMF on which our estimate is based. The estimate of 7.1 million has been used as the basis for economic policy planning. The difference is believed to be the result of underestimating emigration, principally to the US. The last national census was taken just after the end of the civil war in 1992, when the total population was found to be 5,1 million. The new census reveals that 96% of Salvadorans have at least one family member living abroad, while one-fifth of all households receive family remittances. The vast majority of those who left the country in 2007 headed for the US (96%), the rest to Europe (1.6%) and elsewhere in Central America (1.6%). Remittances were equivalent to 18% of GDP in 2007. The census "which was carried out with the support of the UN’s Population Fund and the Inter-American Development Bank (IDB)" also found that almost 63% of the population is urban (up from 50% in 1992), reflecting the continual migration from the countryside to cities. As a result of the new data, the Banco Central de Reserva de El Salvador (the Central Bank) has recalculated income per capita at US $ 3.574 for 2007, rather than the previous estimate of US $2.869. This means that El Salvador’s status has changed from a low-income economy, alongside Nicaragua, Honduras and Guatemala, to a middle-income category, joining Chile, Panama, Costa Rica and Mexico, as defined by the World Bank. This has implications for El Salvador’s access to preferential loans and special credit lines for low-income economies.
Workers send home record amount of remittances to El Salvador
Source: AP
Salvadorans working abroad sent home a record amount of money in remittances in the first five months of the year. The country's central bank says remittances were up by almost 6 percent in the January-May period, as compared to the same period of 2007. The remittances totalled $1.6 billion, the highest amount on record, compared to about $1.51 billion in 2007. Remittances have been dropping in Mexico. One possible difference is the temporary protected status some Salvadorans have in the United States. About 10 percent of the 2.5 million Salvadorans living in the U.S. were given the protected status after their country suffered a series of earthquakes.
Tourism continues so show great growth
El Salvador earned a total of US$ 400 million between the months of January and May 2008 due to tourism, according to the Ministry of Tourism (MITUR). For the first 5 months of 2008, 813,810 foreign tourists arrived in El Salvador, representing a 24% rise in the number of arrivals and a 13% increase in revenues. Guatemala remains El Salvador's number one source of foreign tourists with 199,045 arrivals, nearly 36% of the total number during the first four months of the year. The figure rose some 7.65% with respect to 2007. The United States continues being second with 139,402 arrivals, some 25% of the total number; followed by Honduras, with 85,805 arrivals, i.e., 15.32%. MITUR's promotional work in the U.S. will be strengthened in the next few months by opening a new regional promotional office for Guatemala, Honduras, Nicaragua and El Salvador.
El Salvador and Spain sign tributary agreement
The Spanish government on Friday authorized the signing of a tributary agreement with El Salvador to prevent tax evasion and double taxation. Under the agreement, taxpayers who live or are engaged in economic activities in Spain or El Salvador are required to fulfil tax duties on income and patrimony. It covers a wide range of areas including real estate income, business benefits, royalties and services.
