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Latin America Investment News on Viva Tropical

El Salvador; Lowest Expected Growth in all of Latin America

Article Summary:

Given the economic crisis in the euro zone and the low growth in the United States, El Salvador will continue this year as the country with the lowest growth in Latin America. The biggest challenge for the country’s economy is generating at least 100,000 jobs, which will largely depend upon agreements between the government and entrepreneurs to increase investment.

Original Article Text From El Salvador via Google Translate :

Growth Will Be The Lowest Of All Al

Given the economic crisis in the euro area and the low growth in the United States, El Salvador will continue this year as the country with the lowest growth in Latin America (LA), according to the situation report for the fourth quarter of 2011 presented yesterday Salvadoran Foundation for Economic and Social Development (Fusades).

That is so despite the Asocio for Growth (APC), the Public-Private Asocios (APP), the concession of the port of La Union, the National Development Bank (Bandesal) and Fomilenio II, among other projects, through which the government says that 2012 is the year of breaking the low growth of gross domestic product (GDP), which has remained around 2% in the last 15 years.

The Government has set a range of economic growth for 2012 ranging from 1.9 to 2.5 percent, thanks to these initiatives, which will tear during the course of this year.

But according to Peter Argumedo, coordinator Fusades competitiveness, although it achieved the highest rank of 2.5%, El Salvador will remain well below the rest of Latin America, including “our neighbors in Central America,” he said.

These projects will have poor results while there is uncertainty about the direction of the economy, crime and the contradictions between the executive and his party, and with entrepreneurs, highlighted Alvaro Trigueros, director of economic studies (DEC), Pedro Argumedo coordinator of Carolina Wings competitiveness and Franco, senior analyst of international economics section of think tank.

The global economic environment is also unfavorable, and though in 2011 Salvadoran exports grew 18% and 6.4% of remittances, these variables, especially the first one has been deteriorating in the past year and all indications are that growth will be lower for end of 2012, Franco said wings.

According to spokesmen Fusades, all that remains to be done is to reach agreements between public and private sector on initiatives proposed by the executive, pushing a new Law on Free Zones and introduce reforms to the International Services and jump-start the initiative for Competitiveness.

100 000 jobs
Argumedo Trigueros and stressed that the Salvadoran economy has recovered just employment levels they had in July 2008 when the international crisis began, but still below the production levels achieved in this same month, affected by the contraction of the agricultural sector of -3.9% and the weak recovery.

So for both analysts, scaffolding production has not been able to create new jobs for between 30 000 and 50 000 young people who graduate high school and as they reach the age to enter the formal labor market.

Argumedo said that “the public sector has kept pace with employment growth during the crisis and has expanded, but in private until mid-2008 reached 630 thousand employed workers. That figure dropped to end and the economy has taken three years to regain the jobs lost from 2008 levels, “summarized.

The Amazing Race
To improve the economic prostration, practically, is the country, it is necessary for public and private sectors, to reach effective agreements to implement the initiatives by the government and the main demands of entrepreneurs and investors, said Argumedo.

The main causes that hinder economic growth stagnate in 2012 and foreign direct investment, the analyst cited the lack of direction of the economy, political uncertainty due to the election campaign that focuses on positive aspects for growth and high levels of crime.

Other factors that have deteriorated investment, including local, are the differences between the government and employers, the economic model advocated by the government and his party, and the proposals to change the current economic system, which gives priority to micro and small business.

“All these elements disturb the scenario for the investor. And that slows down investment, which we have had for over three years, being the lowest and the country invests less in relation to GDP in Latin America,” said Argumedo .

To revive the dynamism of the economy, he said, must combine the above factors with government initiatives in order to return attractive to the country, especially for foreign investment, although improved, reaching $ 542 million through the third quarter of 2011, is still lower than the Latin American average.

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From El Salvador

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