Sunday, 21 February 2021 19:57

ANEP: "Now we are poorer, the economy had a drop of approximately US$2.5 billion"

Written by Cindy Moreno

According to Waldo Jiménez, economic manager of the National Association of Private Enterprise (ANEP), the salvadoran economy had a drop of approximately US$2.5 billion in 2020 due to the devastation caused by the coronavirus pandemic.

Jiménez, who participated in the first international meeting of Salvadoran businessmen (ENIDES), said that salvadorans are now poorer.

"Now we are poorer, the economy had a drop of approximately US$2,500 million", he said.

The manager explained that according to data from the International Monetary Fund (IMF) "El Salvador belongs to the third of countries that have had the greatest setback as a result of the pandemic, so it is not the pandemic but the way in which it has been managed".

The economy of El Salvador and the mobility of people to their place of work, during the months of June and July 2020, was the most critical period where only had a mobility of 40% and as a result, the economy had a fall of 19%, this during the period of confinement.

Mobility improved during the third quarter by 60% but the economy fell by 10%, in the fourth quarter of 2020 mobility had an increase of 20% and 22%, however, according to estimates the economy would have a fall between 6% and 7% during this period, said Jimenez.

According to ANEP we had an economic setback, and we are poorer by -9% because the GDP went from US$27,000 to US$24,500 million which means that there was a fall of US$2,500 million.

The projections of the International Monetary Fund (IMF) assume that the salvadoran economy will have a growth of 4.0% during the next four years. El Salvador would be a poorer country compared to 2019.

"Today we are poorer and we have to work much harder to recover the levels of wealth that the country had in 2019 before the pandemic", said Jiménez.

El Salvador and Panama are the countries in the region that have grown the least, while Guatemala presents only a 2% decline, El Salvador has a 350% more decline which means 9%.

Exports suffered a significant drop, El Salvador is sustained by exports and remittances which are fundamental pillars within the national economy, during 2020 exports had a 15% drop which means that for every US$100 that was exported in 2019, in 2020 only US$85 was exported, a decrease of US$900 million dollars. Guatemala grew 1% in exports.

Maquila exports fell back to 1997 levels, while non-traditional exports, which represent 70%, fell back to 2013 levels.

In terms of employment, from January to November 2020 there were 43,683 fewer contributors, and in June 2020 the lowest level was reached when the loss of a little more than 70,000 jobs was registered. With the reopening of the economy, it is expected that the lost jobs will be recovered.

"Today we are poorer because we owe more, before the country was indebted around an average of US$900 million in the short term, and today the country is indebted at levels higher than US$1400 million, it is an increase of US$500 million in the balance of LETES, that is the debt that the country acquires in the short term", reiterated Jiménez.

The government has presented a request for a financing requirement for almost US$1,600 million, several analyses including those made at ANEP indicate that there would be a financing of US$600 that is omitted, this means that the government will require to finance the budget of this year 2021 more than 8% of the GDP, plus 92% would mean that our debt would be more than 100% of the GDP.

Another sector that participated in the meeting was that of salvadorans abroad who considered that controlling social violence in El Salvador and creating incentives are the keys to attract investment from the diaspora of El Salvador.

One of them was Juan Umanzor, president of the Salvadoran American Chamber of Commerce, who years ago bought a piece of land in El Cuco, San Miguel, to establish a hotel on the coast but gave up the project because "insecurity did not allow it.

"The government would have to make incentives, taxes or programs, so that we can invest in El Salvador. But, above all, there is the insecurity, which is what worries most of us", said the native of La Unión.

Oscar Levi Dominguez, CEO El Salvador Corridor-USA, considered that the three million salvadorans abroad are the spokesman to attract investment but we must "give it value".

"We hope that the government (referring to the salvadoran) puts emphasis on empowering the diaspora to invest and also the national entrepreneur".

Domínguez assured that "we want to influence El Salvador and leave a legacy", and for that we have to change "the bad image" of the country abroad.

Mari Carmen Aponte, former U.S. Ambassador to El Salvador, joined this clamor, who has pointed out that the trade policy of the U.S. President, Joe Biden, is going in that direction.

She affirmed that from her perspective, Biden wants to work in the economic investment of the Northern Triangle, and this is expressed in his plans.

"Government investment and international aid alone, however generous, will not be enough to stimulate the kind of economic opportunity the people of Central America need to build a secure and stable middle class. In the end, economies grow sustainably only by attracting more private investment, from international sources and from their own citizens willing to invest in their country", the former diplomat quoted the U.S. President as saying.

Aponte said the Biden Plan proposes to work with the Department of Commerce to evaluate whether Central American countries are respecting their commitments under CAFTA and maximize their trade, and U.S. offers at the same time.

"Strengthening the microfinance sector and banking inclusiveness in the Northern Triangle, with a priority on programs that empower women, economic development to modernize electrical grids, ports and roads so that industry can compete more efficiently are other aspects included in the Biden Plan”, she said.

El Salvador received $5,707.7 million in remittances from the United States at the end of 2020, a figure that represents 96% of the $5,918.6 million that arrived in total to the country. These remittances grew 4.8%, despite the negative outlook due to the covid-19 pandemic, which pointed to a drop of up to 20%.

Last modified on Sunday, 21 February 2021 19:59