Private investment in 2021 was the highest in 61 years

A report published by the Salvadoran Foundation for Economic and Social Development (Fusades), based on data from the Central Reserve Bank (BCR), highlighted that private sector investment reached 18.4% of the Gross Domestic Product (GDP) in 2021, the highest since 1960.

The research indicates that investment reached $5,291 million in 2021, which means an increase of $1,441 million compared to the previous year, when invested capital accumulated 15.7% of GDP.

Fusades points out three moments in the history of El Salvador where capital investment presented an outstanding accumulation: 1978, when it represented 15.6%, «due to good international coffee prices and the public investment cycle that encouraged private and foreign investment».

The next important year was 1995, when investments reached 15.2%, «derived from the signing of the Peace Agreements and the economic reforms to promote exports that increased confidence, but then lost strength,» the entity indicates.

In 2008, it reached 15.9%, owing to investment in banking and telecommunications, as well as the emergence of new productive sectors such as call centers, hotels, synthetic textiles, and the Aeroman company, according to Fusades.

However, the 18.4% reported in 2021 is an unprecedented figure for the country, which the government attributes to the good investment climate fostered by President Nayib Bukele’s management.

In this regard, the commissioner of Strategic Projects, Cristian Flores, considered that «these are concrete facts. It shows that we are on the right track. In 2022, we will continue to reduce paperwork, generating an increasingly better investment climate and more employment opportunities»

The Fusades publication also points out three factors that benefited the increase in private investment last year. These are: the effect of the pandemic, since some investments planned for 2020 had to be delayed until 2021.

Another factor was the recovery of exports, imports, and remittances, which set records throughout last year and finally highlighted the impact of the construction permit backlog, which had been paralyzed since 2017.