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Journalists in El Salvador can freely criticise the government and opposition. Since 2011, there have been no more prison sentences for press offences such as slander. Threats, intimidation and attacks, including assassinations, occur but have become rarer. Their targets are mostly reporters and editors who research the links between organized crime, politics and the economy. Recently, the government and the judiciary have demonstrated an increasing willingness to quickly investigate and punish such acts of violence.

The economy in El Salvador

At around 2.1 % compared with 2.3 % in 2017, economic growth in 2018 remains subdued. The reasons for this are fiscal constraints, low financial reserves in the country, moderate credit growth and weak investment activity. Private consumption will continue to be one of the main drivers of growth in 2018. Accelerated growth is expected in the dominant service sector such as retail, transport and communications. The production sector (especially contract manufacturing) is also expected to develop favorably in 2018. The progress of infrastructure projects should also be accompanied by a revival in the construction industry.

Special developments

Increased use of renewable energies on the rise: Together with the DELSUR energy supply company, the government launched a tender for the generation of 150 MW of electricity from renewable sources – 100 MW solar energy and 50 MW wind energy. In the case of solar energy, production would be conceded for 20 years from 1 February 2019 and in the case of wind energy for 20 years from 1 February 2020. The total investment volume of this project was estimated at around USD 300 million. For 2020, it is planned to have an installed production capacity of 1,500 MW, which would entail investments of over USD 500 million.

In the province of La Paz, in the municipality of Rosario, the Salvadoran government commissioned the largest photovoltaic power plant in Central America with a capacity of 101 MW and an investment volume of USD 1.6 billion.

Economic relations with Austria

Slight increase in Austrian exports: Austrian exports in 2017 rose slightly by + 2.8 % from Euro 6.3 million in the previous year to Euro 6.4 million in 2017. Mechanical engineering products accounted for the largest share of total exports at 42.4 %.

The greatest growth potential lies in the infrastructure sector (above all the modernisation and construction of hospitals) and the use of renewable energies, in particular solar thermal energy and photovoltaics, wind energy but also biomass, which are becoming increasingly important in El Salvador. Softloan financing from Austria has been available for years for government projects.

The special initiative “Business Leads” is intended in particular to explore opportunities for know-how and products of Austrian companies in Central America. As part of business trips, employees of the Foreign Trade Centre Mexico present catalogues and company brochures directly to local companies.

Comprehensive information on El Salvador, the economy, business opportunities, market conditions, taxes and the legal framework can be found in the El Salvador Country Report. In addition, the Foreign Trade Center Mexico is at your disposal for information and personal advice: Simply send us an e-mail or give us a call.

Law and Taxes in El Salvador

The team of the Foreign Trade Center Mexico has a broad expertise and experience in local legal and tax issues, which is at your disposal for initial legal and tax advice. Should your inquiry require legal expertise, we have a large network of German- and national-speaking attorneys. Simply send us an e-mail or give us a call.

Since 2013, the commercial part of the agreement establishing an association between the EU and Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) has been provisionally applied.

In addition, Austria has concluded double taxation agreements with numerous countries. These regulate which state has the right to tax a company, thus preventing double taxation of cross-border activities. The Federal Ministry of Finance provides further important information and a list of all Austrian double taxation treaties.

Travelling to El Salvador

If you are ever in El Salvador, don’t miss the ruins of Joya de Cerén! They are a UNESCO World Heritage Site and one of the most important archaeological sites in Central America. How to get to El Salvador in the first place, as well as tips for your entry, the best hotels, restaurants and the dos and Don´ts of the business world, you can read in this section.