Saturday, March 15, 2008

US economic woes impact El Salvador

In 2007, remittances from Salvadorans living abroad, mostly in the US, hit a record $3.7 billion and consituted 18% of the country's gross domestic product. But this stream of economic support may be weakening. Marcela Sanchez, in her column in the Washington Post described how the US economic slowdown has a ripple impact on El Salvador's economy:

While economists predict that a recession in the U.S. will have a major impact among its closest trading partners such as El Salvador, Latin Americans don't have to read macroeconomic indexes to feel the pinch. As manufacturing and construction slow in the U.S., and the amount of work dwindles, immigrant laborers are having a hard time making ends meet, let alone sending money back home....

In the past, remittances have traditionally increased in times of greatest need, such as in response to economic slumps or natural disasters. Remittances rose significantly after Mexico's 1995 financial crisis and following hurricanes in Central America. This time around, if countries such as El Salvador also enter an economic downturn, the possibility of a remittance surge to help soften the blow is remote.

The statistics kept by international monetary institutions are starting to show this slowdown. This week the InterAmerican Development Bank reported that growth of remittances to Latin America grew at a "sharply lower" pace in 2007 than in previous years. Remittances to El Salvador grew only 1.7% in January 2008 compared to the same period in 2007.

Meanwhile, those dollars being sent back to El Salvador purchase less and less as the value of the dollar continues to fall and inflation in the prices of basic foodstuffs hits hard at the pocketbooks of El Salvador's families. These economic trends show the necessity for El Salvador to create policies promoting sustainable types of development that reduce dependency on the flow of dollars from workers abroad.


HODAD26 said...

been waiting for this post,
hopefully a bit of activity,
ok you go mates....

El-Visitador said...

«promoting sustainable types of development»


We desperately need investments that will create jobs, reduce overall costs, and increase efficiency...

... job creation such as the mines being held back by MARN, the various roads and highways being held back by deluded envirowackos and their FMLN allies, the hydro, gas, and coal power plants being slowed down with help of foreign enviro interests, etc.

Larry said...

"deluded envirowackos"

Would that be the people who think there is something left to save in Salvadoran environment?

(Goodness knows that smog, sewage-laden driniking water, deforestation, etc. all help bring in those tourist $ Oh, and don't forget lead poisoning!)

El-Visitador said...

«smog, sewage-laden driniking water, deforestation, etc. all help bring in those tourist $»

The tourist $ does not come to El Salvador primarily because it is an extremely dangerous place where you are liable as a tourist to get robbed or killed; and secondarily, because cities, roads and beaches are all strewn with trash. Whereas tourists "see" trash, tourists do not see bacteria; for instance, hardly anyone realizes that La Libertad dumps its raw sewage into those pretty breakers everyone likes to surf in.

Crime and trash have very little to do with the job creation potential either scared away, paralyzed, or slowed down by the foreign-driven enviro agitators.

- * -

«smog, sewage-laden drinking water, deforestation»

The road and highway projects that have suffered tree-hugger and FMLN multi-year delays would reduce congestion and thereby smog.

The power projects delayed by MARN would provide lower-cost electricity that would enable at least some peasants stop destroying trees for firewood.

The natural gas project delayed by MARN will provide 50,000 daily gallons of pure, crystalline, drink water for La Unión.