El Salvador, formally the Republic of El Salvador (Spanish: Repblica de El Salvador, meaning “Republic of the Savior”), is Central America’s smallest and most populous nation. San Salvador is El Salvador’s capital and biggest city. As of 2015, the nation was home to about 6.38 million people, the majority of whom are Mestizos of European and Indigenous American ancestry.
For millennia, El Salvador was inhabited by a variety of Mesoamerican peoples, most notably the Cuzcatlecs, as well as the Lenca and Maya. The Spanish Empire acquired the area in the early 16th century, integrating it into the Viceroyalty of New Spain, which was headquartered in Mexico City. In 1821, as part of the First Mexican Empire, the nation gained independence from Spain, only to secede again in 1823 as part of the Federal Republic of Central America. El Salvador became independent in 1841, after the collapse of the republic, until establishing a brief union with Honduras and Nicaragua known as the Greater Republic of Central America, which lasted from 1895 to 1898.
El Salvador experienced chronic political and economic instability from the late nineteenth to the mid-twentieth centuries, marked by coups, revolts, and a series of authoritarian regimes. Persistent socioeconomic disparity and political discontent culminated in the Salvadoran Civil War (1979–1992), which pitted the military-led government against a coalition of leftist guerrilla organizations. The dispute was resolved via a negotiated solution that created a multiparty constitutional republic that still exists today.
El Salvador’s economy has traditionally been dominated by agriculture, starting with the indigo plant (ail in Spanish), which was the most significant crop during the colonial era, and then by coffee, which accounted for 90 percent of export profits by the early twentieth century. El Salvador has subsequently decreased its reliance on coffee and begun diversifying its economy via the establishment of trade and financial connections and the expansion of the industrial sector. The colón, El Salvador’s national currency from 1892, was replaced in 2001 by the US dollar.
As of 2010, El Salvador was ranked 12th in Latin America and fourth in Central America on the Human Development Index (after Panama, Costa Rica, and Belize), owing in part to the country’s continuing fast industrialisation. The nation, however, continues to face high rates of poverty, inequality, and violence.
An estimated 1,394,000 international tourists visited El Salvador in 2014. Tourism contributed US$ 855.5 million to El Salvador’s GDP in 2013. This corresponded to 3.5 % of the total GDP.
Tourism directly supported 80,500 jobs in 2013. This corresponded to 3.1 % of total employment in El Salvador. In 2013, tourism indirectly supported 210,000 jobs, equivalent to 8.1 % of total employment in El Salvador.
The airport for international flights in El Salvador is Comalapa International Airport. This airport is located about 40 km (25 mi) southeast of San Salvador.
Most North American and European tourists seek out El Salvador’s beaches and nightlife. Apart from these two attractions, El Salvador’s tourist landscape is somewhat different from that of other Central American countries. Due to its geographical size and urbanisation, there are not many nature-related tourist destinations, such as eco-tours or archaeological sites, open to the public. Surfing is an area of nature tourism that has gained popularity in recent years, with Salvadoran beaches becoming increasingly popular.
Surfers visit many of the beaches on the coast of La Libertad and eastern El Salvador to find surf spots that are not yet crowded. The use of the US dollar as the Salvadoran currency and direct 4-6 hour flights from most US cities are factors that attract American tourists. The urbanisation and Americanisation of Salvadoran culture has also led to an abundance of American-style shopping malls, shops and restaurants in the three major urban areas, especially in Greater San Salvador.
According to the Salvadoran newspaper El Diario De Hoy, the top 10 attractions are: the coastal beaches, La Libertad, Ruta Las Flores, Suchitoto, Playa Las Flores in San Miguel, La Palma, Santa Ana (site of the country’s highest volcano), Nahuizalco, Apaneca, Juayua and San Ignacio.
El Salvador is located in the Central American isthmus, between latitudes 13° and 15°N and longitudes 87° and 91°W. It extends 270 km (168 mi) from west-northwest to east-southeast and 142 km (88 mi) from north to south, with a total area of 21,041 km2 (8,124 sq mi). As the smallest country in the Americas, El Salvador is affectionately known as Pulgarcito de America (the “Thumb of America”). The highest point in El Salvador is Cerro El Pital at 2,730 metres on the border with Honduras.
El Salvador has a long history of destructive earthquakes and volcanic eruptions. The capital San Salvador was destroyed in 1756 and 1854 and suffered severe damage in the earthquakes of 1919, 1982 and 1986. El Salvador has more than twenty volcanoes, two of which, San Miguel and Izalco, have been active in recent years. From the early 19th century until the mid-1950s, Izalco erupted with a regularity that earned it the name “Lighthouse of the Pacific”. Its fulminant eruptions were visible from afar at sea, and at night its glowing lava transformed it into a radiant cone of light.
El Salvador has over 300 rivers, of which the Rio Lempa is the most important. The Rio Lempa rises in Guatemala and flows through the northern mountain range, along much of the central plateau and through the southern volcanic chain to the Pacific Ocean. It is the only navigable river in El Salvador. It and its tributaries drain about half of the country’s area. The other rivers are generally short and drain the Pacific lowlands or flow from the central plateau through gaps in the southern mountain range to the Pacific. These include the Goascorán, Jiboa, Torola, Paz and Río Grande de San Miguel.
There are several lakes surrounded by volcanic craters in El Salvador, the most important being Lake Ilopango (70 km²) and Lake Coatepeque (26 km²). Lake Güija is the largest natural lake in El Salvador (44 km²). Several artificial lakes were created by the Lempa Dam, the largest of which is Embalse Cerrón Grande (135 km²). In total, there are 320 km2 (123.6 sq mi) of water within El Salvador’s borders.
El Salvador shares borders with Guatemala and Honduras. The total length of the state border is 546 km: 203 km with Guatemala and 343 km with Honduras. It is the only country in Central America without a Caribbean coast. The Pacific coast is 307 km (191 mi) long.
Two parallel mountain ranges cross El Salvador in the west with a central plateau in between and a narrow coastal plain running along the Pacific Ocean. These physical features divide the country into two physiographic regions. The mountain ranges and the central plateau, which cover 85% of the country, form the interior highlands. The remaining coastal plains are called the Pacific lowlands.
The population of El Salvador in 2015 was 6,377,195, up from 2,200,000 in 1950. In 2010, the population under 15 years of age was 32.1%, 61% were between 15 and 65 years of age, while 6.9% were 65 or older.
The capital San Salvador has about 2.1 million inhabitants. An estimated 42% of El Salvador’s population lives in rural areas. Urbanisation has increased rapidly in El Salvador since the 1960s, with millions of people moving to the cities and creating associated problems for urban planning and supply.
El Salvador’s population is composed of mestizos, whites and indigenous peoples. Eighty-six per cent of Salvadorans are of mestizo origin, meaning they have both indigenous and European ancestry. Within the mestizo population, both Salvadorans of European, especially Mediterranean, race and Afro-Salvadorans and indigenous Salvadorans who do not speak indigenous languages or have an indigenous culture identify as culturally mestizo.
12.7 % of Salvadorans are white. The population is mainly made up of people of Spanish origin, but there are also Salvadorans of French, German, Swiss, English, Irish, Italian, Portuguese, Swedish, Norwegian, Dutch and Danish origin. Most Central European immigrants to El Salvador came as refugees from the Czech Republic, Germany, Hungary, Poland and Switzerland during the Second World War. There is also a small community of Jews, Palestinian Christians and Arab Muslims (mainly Palestinians).
There are up to 100,000 Nicaraguans living in El Salvador.
0.23% of the population is fully indigenous, the ethnic groups are Kakawira, who represent 0.07% of the total population of the country, then (Pipil) 0.06%, (Lenca) 0.04% and other smaller groups 0.06%. Very few Amerindians have preserved their customs and traditions as they have adapted over time to the dominant Mestizo/Hispanic culture.
There is a small Afro-Salvadorian population, which makes up 0.13% of the total population, as black people have traditionally been prevented from immigrating by government policy.
Among the immigrant groups in El Salvador, Palestinian Christians stand out. Although their numbers are small, their descendants have gained great economic and political power in the country, as evidenced by the election of former President Antonio Saca, whose opponent in the 2004 elections, Shafik Handal, was also of Palestinian origin, and the flourishing commercial, industrial and construction enterprises owned by this ethnic group.
In 2004, there were about 3.2 million Salvadorans living outside El Salvador, with the United States traditionally the preferred destination for Salvadoran economic migrants. In 2012, there were about 2.0 million Salvadoran immigrants and Salvadoran Americans in the United States, making them the sixth largest immigrant group in the country. The second largest destination of Salvadorans living abroad is Guatemala, with more than 111,000 people, mostly in Guatemala City. Salvadorans also live in other neighbouring countries such as Belize, Honduras and Nicaragua. Other countries with significant Salvadoran communities are Canada, Mexico, the United Kingdom (including the Cayman Islands), Sweden, Brazil, Italy, Colombia and Australia.
The majority of El Salvador’s population is Christian. Roman Catholics (47 percent) and Protestants (33 percent) are the two main denominations in the country. People who do not belong to any religious group make up 17 percent of the population. The remaining 3 % of the population is made up of Jehovah’s Witnesses, Hare Krishnas, Muslims, Jews, Buddhists, Latter-day Saints and people adhering to indigenous religious beliefs. The number of evangelicals in the country is growing rapidly.
El Salvador’s economy has been hampered at times by natural disasters such as earthquakes and hurricanes, by government policies imposing large economic subsidies, and by official corruption. The subsidies have become such a problem that the International Monetary Fund suspended a $750 million loan to the central government in April 2012. President Funes’ chief of staff, Alex Segovia, admitted that the economy was at the “point of collapse”.
Antiguo Cuscatlán has the highest per capita income of all cities in the country and is an international investment centre.
GDP in purchasing power parity (PPP) was estimated at USD 25.895 billion in 2008. The service sector is the largest component of GDP at 64.1%, followed by the industrial sector at 24.7% (2008 est.). Agriculture accounts for only 11.2% of GDP (2010 est.)
After 1996, GDP grew at an average annual rate of 3.2 % real growth. The government launched free market initiatives and the real GDP growth rate was 4.7 % in 2007.
In December 1999, net foreign exchange reserves amounted to US$ 1.8 billion, roughly equivalent to five months of imports. With this reserve of hard currency, the Salvadoran government began a monetary integration plan on 1 January 2001, whereby the US dollar became legal tender alongside the Salvadoran colón and all official accounting was done in US dollars. This formally limited the government’s implementation of open market monetary policy to influence the short-term variables of the economy. In September 2007, net foreign exchange reserves amounted to $2.42 billion.
El Salvador has long faced the challenge of developing new growth sectors for a more diversified economy. In the past, the country produced gold and silver, but recent attempts to reopen the mining sector, which was expected to contribute hundreds of millions of dollars to the local economy, failed after President Saca closed the Pacific Rim Mining Corporation.
Like other former colonies, El Salvador has been considered a single-export economy (an economy heavily dependent on one type of export) for many years. In colonial times, El Salvador was a thriving exporter of indigo, but after the invention of synthetic dyes in the 19th century, the new modern state turned to coffee as its main export.
San Miguel is an important economic centre of El Salvador and hosts the “Carnaval de San Miguel”, one of the largest entertainment and food festivals in Central America.
The government has sought to improve the collection of current revenues, with a focus on indirect taxes. A 10% value-added tax (IVA in Spanish), introduced in September 1992, was increased to 13% in July 1995.
Inflation is constant and among the lowest in the region. Since 1997, inflation has averaged 3 per cent, with an increase of almost 5 per cent in recent years. As a result of the FTAs, total exports increased by 19 per cent from 2000 to 2006, from $2.94 billion to $3.51 billion, and total imports increased by 54 per cent, from $4.95 billion to $7.63 billion. This led to a 102 per cent increase in the trade deficit, from $2.01 billion to $4.12 billion.
El Salvador has created an open environment for trade and investment and has embarked on a wave of privatisation that extends to telecommunications, electricity distribution, banking and pension funds. In late 2006, the government and the Millennium Challenge Corporation signed a five-year, $461 million agreement to spur economic growth and reduce poverty in the country’s northern region, the main conflict zone during the civil war, by investing in education, public services, business development and transport infrastructure. With the introduction of the US dollar as its currency in 2001, El Salvador lost control over its monetary policy. Any counter-cyclical policy response to the recession must be through fiscal policy, which is constrained by the legal requirements for a two-thirds majority to approve any international financing.
Transfers from abroad
El Salvador leads the region in per capita remittances, with flows almost equal to total export earnings; about one-third of all households receive these financial inflows. Remittances from Salvadorans living and working in the US to family members in El Salvador are an important source of foreign earnings, offsetting the large trade deficit of $4.12 billion. Remittances have increased steadily over the past decade, reaching a record level of $3.32 billion in 2006 (a 17 per cent increase over the previous year), or about 16.2 per cent of gross domestic product (GDP).
Remittances have had both positive and negative impacts on El Salvador. In 2005, the number of people living in extreme poverty in El Salvador was 20 percent, according to a report by the United Nations Development Programme. Without remittances, the number of Salvadorans living in extreme poverty would be 37 percent. While Salvadorans’ education levels have risen, wage expectations have risen faster than skills or productivity. For example, some Salvadorans are no longer willing to take jobs that pay less than what they receive monthly from family members abroad. This has led to an influx of Hondurans and Nicaraguans willing to work for the prevailing wage. In addition, the local tendency to consume rather than invest has increased.
The money from remittances has also increased the prices of certain goods such as real estate. With much higher salaries, many Salvadorans abroad can afford to pay more for houses in El Salvador than local Salvadorans, driving up the prices that all Salvadorans have to pay.