After signing a peace agreement in 1992, this small, densely populated country, managed to emerge from a bitter civil war in the 1980s, during which an estimated 75,000 people died.
Since the end of the conflict, El Salvador has made significant progress towards consolidating peace and democracy. The country's political transformation led to major structural reforms and stable macroeconomic policies that resulted in strong economic performance (an average yearly growth of around 6%) during the 1990s.
Poverty levels in the country declined significantly between 1991 and 2002 (about 27 percentage points), with extreme poverty dropping by half over the same period. There were also important social advances, as infant and maternal mortality rates were reduced and school enrollment and access to reproductive health and water services increased.
After an average economic growth of 2% during the last 15 years, GDP growth in El Salvador reached 4.7% in 2007. However, the effects of the global financial crisis in 2008 resulted in a drop in exports and remittances, higher levels of unemployment and rising food and energy prices.
Between 2007 and 2008, the percentage of people in poverty increased from 34.6% to 40%. However, in 2012, the poverty rate was 34.5%, a figure that decreased to 28.9% in 2013, according to the latest survey of the Ministry of Economy of El Salvador.
The Salvadoran economy experienced a GDP contraction of 3.1% in 2009, and in response to the effects of the economic downturn, the Government formulated the Anti-Crisis Plan, with a stimulus package of nearly US$600 million that included measures to mitigate the effects of the crisis and pave the way for recovery covering four broad areas:
- Income and Employment Protection Program
- Universal Social Protection System
- Public Finances Strengthening
- Construction of State Policies
The Salvadoran economy has begun to recover at a slow pace: it registered a 2% growth in 2011; a 1.6% in 2012 and a 1.9% in 2013. According to official data the Salvadoran economy is estimated to grow by 2.1% in 2014. However, there are still many challenges.
Crime and violence threaten social development and economic growth in El Salvador and negatively affect the quality of life of its citizens. After a sharp and sustained increase in the levels of violent crime since 2000, the murder rate peaked at 71 homicides per 100,000 inhabitants in 2009, declining slightly to 69 in 2011.
An ongoing truce between rival street gangs has further reduced homicide rates in El Salvador since the pact began in March of 2012 to 39,6 homicides per 100,000 inhabitants by the end of 2013. El Salvador's vulnerability to adverse natural events, exacerbated by environmental degradation and extreme climate variability, also compromises the country's sustainable development and long-term economic growth. In 2011, Tropical Depression 12E hit El Salvador, affecting more than 1.4 million people and causing $902 million in damages and losses.
Last Updated: Apr 10, 2014