The original report was published in the USA Today on Monday, October 24, 2011
Banking on growth
The president of El Salvador’s central bank has confidence in his country’s economy, and its people
Despite being the smallest country geographically in Central America, El Salvador has the third largest economy in the region. In common with most countries around the world, its economy was dealt a blow in 2009 by the global recession and real GDP contracted by 3.5%, but a rise in exports and remittances helped create a slow return to positive growth in 2010.
The economy grew by 1.4% last year, which is slightly higher than the estimated 0.7%, and in June 2011 El Salvador’s Economic Activity Volume Index showed expansion had risen to 3.6%. In addition, tax revenues and exports were up and remittances exceeded $2,100 million, representing an increase of 4.5% compared to last year, according to the central bank.
According to Finance Minister Carlos Caceres, the financial system and increased tax revenues are the two main strengths of El Salvador that make it ready to face any possible financial crisis in the future, saying that its efforts to maintain fiscal stability enable it to increase tax revenues and rationalize public spending.
Also, Economy Minister Hector Dada Hirezi recently launched the government’s Industrial Policy 2011-2024, which is jointly backed by the business community to revitalize and transform the economic sector and contribute to national development.
“Various indicators suggest that economic activity is recovering at an acceptable pace,” says Carlos Gerardo Acevedo, president of the Banco Central de Reserva de El Salvador, the nation’s central bank. “As a government we are committed to a growth of 2.0%, which is a more realistic target that would respond to various initiatives that are under way or about to be implemented. We are strongly committed to implementing the new Development Banking System, which we expect to commence operations shortly.”
The economy became fully dollarized in 2001, and after a decade of liberalization the domestic banking sector has now become one of the strongest in regional security. International conglomerates have acquired the country's most representative banks, resulting in an injection of almost $1 billion in foreign direct investment (FDI).
The Central Bank’s monthly activity index indicates that the economy continues to gather strength, growing by 3.2% year on year in April.
Nominal GDP: (m) 22.640
A UNITED WORLD SUPPLEMENT PRODUCED BY:
Juan Carlos Jover and Lucia Valero
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