El Salvador

US

Area:

21,040 square km, slightly smaller than Massachusetts

9,631,418 sq km, about half the size of South America

Population

6,704,932 (July 2005 est.)

295,734,134 (July 2005 est.)

Median age:

21.57 years (2005 est.)

36.27 years

Population growth rate:

1.75% (2005 est.)

0.92% (2005 est.)

Net migration rate:

-3.67 migrants/1,000 population (2005 est.)

3.31 migrants/1,000 population (2005 est.)

Life expectancy at birth:

71.22 years

77.71 years

Economy overview:

The smallest country in Central America, El Salvador has the third largest economy, but growth has been minimal in recent years. Hoping to stimulate the sluggish economy, the government is striving to open new export markets, encourage foreign investment, and modernize the tax and healthcare systems. Implementation in 2006 of the Central America-Dominican Republic Free Trade Agreement, which El Salvador was the first to ratify, is viewed as a key policy to help achieve these objectives. The trade deficit has been offset by annual remittances from Salvadorans living abroad - 16% of GDP in 2004 - and external aid. With the adoption of the US dollar as its currency, El Salvador has lost control over monetary policy and must concentrate on maintaining a disciplined fiscal policy.

The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $41,800. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy considerably greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to entry in their rivals' home markets than the barriers to entry of foreign firms in US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. The response to the terrorist attacks of 11 September 2001 showed the remarkable resilience of the economy. The war in March/April 2003 between a US-led coalition and Iraq, and the subsequent occupation of Iraq, required major shifts in national resources to the military. The rise in GDP in 2004 and 2005 was undergirded by substantial gains in labor productivity. The economy suffered from a sharp increase in energy prices in mid-2005, but by late in the year those prices dropped back to earlier levels. Hurricane Katrina caused extensive damage in the Gulf Coast region, but had a small impact on overall GDP growth for the year. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups.

GDP (purchasing power parity):

$33.89 billion (2005 est.)

$12.37 trillion (2005 est.)

GDP (official exchange rate):

$16.52 billion (2005 est.)

$12.77 trillion (2005 est.)

GDP - real growth rate:

2% (2005 est.)

3.5% (2005 est.)

GDP - per capita:

purchasing power parity - $5,100 (2005 est.)

purchasing power parity - $41,800 (2005 est.)

GDP - composition by sector:

agriculture: 9.8%
industry: 30.3%
services: 60% (2005 est.)

agriculture: 1%
industry: 20.7%
services: 78.3% (2005 est.)

Labor force:

2.81 million (2005 est.)

149.3 million (includes unemployed) (2005)

Labor force - by occupation:

agriculture 17.1%, industry 17.1%, services 65.8% (2003 est.)

farming, forestry, and fishing 0.7%, manufacturing, extraction, transportation, and crafts 22.9%, managerial, professional, and technical 34.7%, sales and office 25.4%, other services 16.3%
note: figures exclude the unemployed (2005)

Unemployment rate:

6.5% - but the economy has much underemployment (2005 est.)

5.1% (2005)

Population below poverty line:

36.1% (2003 est.)

12% (2004 est.)

Household income or consumption by percentage share:

lowest 10%: 1.4%
highest 10%: 39.3% (2001)

lowest 10%: 1.8%
highest 10%: 30.5% (1997)

Inflation rate (consumer prices):

4.7% (2005 est.)

3.2% (2005 est.)

Investment (gross fixed):

15.8% of GDP (2005 est.)

16.8% of GDP (2005 est.)

Budget:

revenues: $2.84 billion
expenditures: $3.167 billion, including capital expenditures of NA (2005 est.)

revenues: $2.119 trillion
expenditures: $2.466 trillion, including capital expenditures of NA (2005 est.)

Public debt:

45.8% of GDP (2005 est.)

64.7% of GDP (2005 est.)

Agriculture - products:

coffee, sugar, corn, rice, beans, oilseed, cotton, sorghum; shrimp; beef, dairy products

wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products; forest products; fish

Industries:

food processing, beverages, petroleum, chemicals, fertilizer, textiles, furniture, light metals

leading industrial power in the world, highly diversified and technologically advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining

Exports:

$3.586 billion (2005 est.)

$927.5 billion f.o.b. (2005 est.)

Exports - partners:

US 65.6%, Guatemala 11.8%, Honduras 6.3% (2004)

Canada 23%, Mexico 13.6%, Japan 6.7%, UK 4.4%, China 4.3% (2004)

Imports:

$6.678 billion (2005 est.)

$1.727 trillion f.o.b. (2005 est.)

Imports - partners:

US 46.3%, Guatemala 8.1%, Mexico 6% (2004)

Canada 17%, China 13.8%, Mexico 10.3%, Japan 8.7%, Germany 5.2% (2004)

Debt - external:

$8.273 billion (30 June 2005 est.)

$8.837 trillion (30 June 2005 est.)

Economic aid – recipient/donor:

recipient: $125 million of which, $53 million from US (2003)

donor: ODA, $6.9 billion (1997)

Currency:

US dollar - the US dollar became El Salvador's currency in 2001

US dollar