Industrial production in El Salvador recovered by 49.8% as of May 2021
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The manufacturing sector has already recovered 5,678 jobs and industrial production in El Salvador, led by the textile and clothing sectors. However, the Salvadoran Association of Industrialists (ASI) highlights the importance of maintaining health protocols to continue the economic recovery.
The Index of Industrial Production in El Salvador showed a recovery of 49.8% as of May 2021. This progress was recently reported by the Salvadoran Association of Industrialists (ASI).
The organization also highlighted that the IVAE (Volume Index of Economic Activity) increased by a factor of 25.1% when comparing April 2020 and April 2021.
The intelligence manager of the ASI, Karla Domínguez, explained that the industrial sector is recovering to its normal production levels, exports and sources of employment.
In April 2020, the industrial sector was affected by a contraction of the IVAE that impacted the economy in general. This situation, of course, was due to the production shutdown that occurred as a result of the Covid-19 quarantine.
Currently, industrial production in El Salvador contributes 16.6% to the country’s total Gross Domestic Product (GDP).
Domínguez stressed that in the same way as the industry grows, the economy in general increases. The continuing recovery has boosted exports and has occasioned the recovery of more than 9,000 jobs in the private sector. In industry, 5,678 positions have been recovered.
“It is important to mention that we have not stopped addressing the health measures that need to be put into effect for the pandemic. In addition, we must continue to implement all available biosecurity measures,” Domínguez stated.
The president of the ASI, Eduardo Cader, also emphasized that the economy has benefited from a dose of optimism. This is because the effort to vaccinate the Salvadoran workforce against COVID-19 continues to progress. However, despite this forward movement, companies in El Salvador recognize that respect for health protocols is critical for recovery to continue its positive trajectory.
As of May of this year, total exports showed an aggregate value of US $2,697.8 million. This figure represents a growth of 41.8%, which is the equivalent of US $ 795.2 million more than in 2020.
Accumulated manufacturing exports as of May 2021 represented 96.1% of the total transacted by the country, that is, US $ 2,591.5 million, with a growth of 49.3%. This rate of increase is equivalent to US $ 790 million over the previous year’s totals.
Among the most representative industrial sectors, according to data as of May of this year from the Central Reserve Bank, are the textile and clothing sector, which represented 39.7% with US $ 1,070 million; the food sector was 7.7% with US $ 208 million; plastics sector 7.4% with US $ 199.3 million; paper, cardboard, and graphic arts 6.0% with US $ 162 million.
Other items that have played a representative role in exports and industrial production in El Salvador are sugar agribusiness with 5.7%; metalworking 4.3%; pharmaceuticals 2.9%; beverages 2.1%; furniture 0.6%; footwear 0.3%; and cement with 0.03%.
Regarding exports, according to May data, the Information and Communication Technology sector shipped goods valued at US $ 9.6 million. This figure was considerably more than the $ 5.6 million that was sold last year. “These products do not include exports of technological applications because their measurement requires another standard,” Domínguez said.
“Some percentages can be seen to be low, but they have an important share in exports, production, and job creation,” said the industry spokesperson.
As of April of this year, Salvadoran Social Security Institute records indicate that there are 664,254 employees in the country’s private sector. This figure represents a total of 9,982 more jobs compared to April 2020. Of that amount, the industrial sector accounted for 184,065 workers. That number represents a gain of 5,678 over April of last year.
“Industrial production in El Salvador represented 21.7% of the total employment generated in the private sector. Different economic activities such as industry, commerce, and professional activities have presented the greatest increases,” highlighted Domínguez.
Within the industrial sector, the textile and clothing sector recovered 3,029 jobs in April compared to April 2020; the paper, cardboard, and graphic arts sector recovered 149; plastics added 772 employees; metalworking added 350 jobs; the beverage sector recovered 151 positions.
Meanwhile, the food sector had a loss of 1,070 jobs. This decrease occurred mainly in mills and flour and meat processing operations. The technology sector also lost 115 positions as of April of this year, compared to April 2020.
Raising the minimum wage will affect industrial production in El Salvador
Domínguez mentioned that the administration of President Bukele makes efforts to stimulate the level of confidence in the productive sector to maintain the pace of economic recovery and industrial activity.
Therefore, the president of the ASI considered that the increase in the minimum wage, which is scheduled to be implemented in August, will impact companies’ costs. These higher costs may harm their competitive position.
“There are companies that can absorb a salary increase, but there are others that cannot do so. In this instance, higher costs will be transferred to the consumer,” Eduardo Cader stated.
He reiterated that the country must establish and maintain legal certainty and avoid decrees that are inconsistent with the best interest of El Salvador’s productive sector. “That is a key consideration. The government must widely discuss the implementation of laws and decrees with the individual industries that are affected,” he argued.
Regarding El Salvador’s economic relationship with China, he said that there is hope that local products such as iron will be taken into account in constructing the two countries’ cooperative projects. These include the dock at the Port of La Libertad, the waste treatment plant in Ilopango and the stadium that is to be built in San Salvador, and others.
The ASI president also called for a review of government debt levels and advocates that there should be a measurable austerity plan in all ministries, the federal government, and municipalities to reduce redundant and unnecessary spending.
The Index of Industrial Production in El Salvador showed a recovery of 49.8% as of May 2021. This progress was recently reported by the Salvadoran Association of Industrialists (ASI).
The organization also highlighted that the IVAE (Volume Index of Economic Activity) increased by a factor of 25.1% when comparing April 2020 and April 2021.
The intelligence manager of the ASI, Karla Domínguez, explained that the industrial sector is recovering to its normal production levels, exports and sources of employment.
In April 2020, the industrial sector was affected by a contraction of the IVAE that impacted the economy in general. This situation, of course, was due to the production shutdown due that occurred as a result of the Covid-19 quarantine.
Currently, the industrial production in El Salvador contributes 16.6% to the country’s total Gross Domestic Product (GDP).
Domínguez stressed that in the same way as the industry grows, the economy in general increases. The continuing recovery has boosted exports and has occasioned the recovery of more than 9,000 jobs in the private sector and, specifically, in the industry, 5,678 positions have been recovered.
“It is important to mention that we have not stopped addressing the health measures that need to be put into effect for the pandemic. In addition, we must continue to implement all the biosecurity measures,” Domínguez stated.
The president of the ASI, Eduardo Cader, also emphasized that the economy has benefited from a dose of optimism. This is because the effort to vaccinate the Salvadoran workforce against COVID-19 continues to progress. However, despite this forward movement, companies in El Salvador recognize that respect for health protocols depends is critical for recovery to continue its positive trajectory.
As of May of this year, total exports showed an aggregate value of $ 2,697.8 million. This figure represents a growth of 41.8%, which is the equivalent of $ 795.2 million more than in 2020.
Accumulated manufacturing exports as of May 2021 represented 96.1% of the total transacted by the country, that is, $ 2,591.5 million, with a growth of 49.3%. This rate of increase is equivalent to $ 790 million over the previous year’s totals.
Among the most representative industrial sectors, according to data as of May this year from the Central Reserve Bank, are the textile and clothing sector, which represented 39.7% with $ 1,070 million; the food sector was 7.7% with $ 208 million; plastics sector 7.4% with $ 199.3 million; paper, cardboard, and graphic arts 6.0% with $ 162 million.
Other items that have played a representative role in exports and industrial production in El Salvador are sugar agribusiness with 5.7%; metalworking 4.3%; pharmaceuticals 2.9%; beverages 2.1%; furniture 0.6%; footwear 0.3%; and cement with 0.03%.
Regarding exports, according to May data, the Information and Communication Technology sector shipped goods valued at $ 9.6 million. This figure was considerably more than the $ 5.6 million that was sold last year. “These products do not include exports of technological applications because their measurement requires another type of technology,” Domínguez said.
“Some percentages can be seen to be low, but they have an important share in exports, production, and job creation,” said the industry spokesperson.
As of April of this year, the Salvadoran Social Security Institute records indicate that there are 664,254 employees in the Salvadoran private sector. This figure represents a total of 9,982 more jobs compared to April 2020. Of that amount, the industrial sector accounted for 184,065 workers. That number represents a gain of 5,678 over April of last year.
“Industrial production in El Salvador represented 21.7% of the total employment generated in the private sector. Different economic activities such as industry, commerce, and professional activities have presented the greatest increases,” highlighted Domínguez.
Within the industrial sector, the textile and clothing sector recovered 3,029 jobs in April compared to April 2020; the paper, cardboard, and graphic arts sector recovered 149; plastics added 772 employees; metalworking added 350 jobs; the beverage sector recovered 151 positions.
Meanwhile, the food sector had a loss of 1,070 jobs. This decrease occurred mainly in mills and flour and meat processing operations. The technology sector also lost 115 positions as of April of this year, compared to April 2020.
Raising the minimum wage will affect industrial production in El Salvador
Domínguez mentioned that the administration of President Bukele makes efforts to stimulate the level of confidence in the productive sector to maintain the pace of economic recovery and industrial activity.
Therefore, the president of the ASI considered that the increase in the minimum wage, which is scheduled to be implemented in August, will impact companies’ costs. These higher costs may harm their competitive position.
“There are companies that can absorb a salary increase, but there are others that cannot do so. In this instance, higher costs will be transferred to the consumer,” Eduardo Cader stated.
He reiterated that the country must establish and maintain legal certainty and avoid decrees that are inconsistent with the best interest of El Salvador’s productive sector. “That is a key consideration. The government must widely discuss the implementation of laws and decrees with the individual industries that are affected,” he argued.
Regarding El Salvador’s economic relationship with China, he said that there is hope that local products such as iron will be taken into account in constructing the two countries’ cooperative projects. These include the dock at the Port of La Libertad, the waste treatment plant in Ilopango and the stadium that is to be built in San Salvador, and others.
The ASI president also called for a review of government debt levels and advocates that there should be a measurable austerity plan in all ministries, government, and municipalities to reduce redundant and unnecessary spending.
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