A. M. 
Micro and small enterprises (MSMEs) are consolidating their position as the main engine of El Salvador’s economy, representing approximately 98.4% of businesses and contributing an average of around 42.9% of the Gross Domestic Product (GDP), according to the report “State of MSMEs 2025: The Other Side of the Economy” by País MYPE. These figures confirm the sector’s strategic importance in generating income, employment, and productive activity in the country.
The study highlights that, despite their economic relevance, a large portion of MSMEs face a gap between their growth aspirations and their actual capacity to scale. Although six out of ten entrepreneurs express their intention to expand, factors such as low productivity, competition based on imitation, and technological limitations restrict their development.
The report highlights that the adoption of artificial intelligence (AI) in the sector remains limited, with less than 6% of SMEs using these tools. However, digitalization and data usage represent an opportunity to improve inventory management, personalize offers, and make data-driven decisions, which could boost the sector’s competitiveness.
Another challenge identified is the dependence on concentrated suppliers and sales channels, which creates vulnerability to increased logistics costs or supply chain disruptions. The study suggests that alliances between micro and small enterprises (MSEs) and joint purchasing could help reduce costs and improve profit margins.
It also points out that a lack of time and resources limits entrepreneurs’ ability to innovate. Unpaid domestic work affects the productivity of many women entrepreneurs, highlighting the need to automate administrative and operational processes to free up time for business strategy and expansion.
The report also emphasizes that formal MSEs exhibit higher levels of productivity than informal ones, reinforcing the importance of formalization and professionalization of processes to access corporate clients and more demanding markets. Furthermore, innovation is identified as a key differentiator, since replicating business models limits growth and value creation.
Another relevant aspect is the lack of succession plans in many family businesses, which leads to their demise when the founder retires. The study recommends strengthening organizational culture and considering employee participation schemes for key personnel to ensure business continuity.
In conclusion, the “State of MSMEs 2025” report demonstrates that micro and small enterprises are the backbone of the salvadoran economy, but they require improvements in productivity, innovation, and management to transform their economic contribution into sustainable growth. Technology adoption, formalization, and strategic planning are emerging as key elements for the MSME sector to continue being an engine of national development.
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