Wednesday, 03 April 2024 19:51

Private enterprise has generated US$1 billion in profits in the country

Written by Karla Gutiérrez

Transnational companies in El Salvador have had record profits in three consecutive years with one billion dollars in profits, that is to say that last year these companies had around one billion four hundred million dollars in profits, according to data that the President of the Banco Central de Reserva, Douglas Rodriguez announced in a television interview.

Something very important that these companies are doing, is that the profits are no longer being taken out of the country, but are being invested in El Salvador, which is very beneficial for the region if we take into account that the country has just gone through an electoral period, in which it is normal for companies to decide to leave or send it to their headquarters, due to the uncertainty that is always generated in this situation.

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However, this has not been the case this year, on the contrary, profits are being reinvested in El Salvador, due to the improvements in economic public policies that are generating confidence in entrepreneurs that are making them want to expand in the region, which generates jobs and revitalization of the economy.

According to BCR data, if this trend continues, the numbers of foreign investment will be better than the results of 2023, in which US$759.7 million of investment was obtained.

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If there is no capital flight, companies have more money available to invest in the country.

These important data benefit the salvadoran population, because if there is a "reinvestment" by companies, they expand and generate jobs that directly help the population because the labor is obtained locally, thus improving the income of people for their private consumption, which contributes to the economic growth of the country, in addition to remittances, which is also a determining factor.

While it is true that various incentives have been created for private investment in El Salvador, such as, for example, exempting companies from taxes, there is another very important factor that is the improvement in security, although it is not an economic factor as such, but rather a social one, but it does affect it directly.

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Micro, medium and large companies had to pay extortion to criminal groups, to the point that this behavior became so common that it was included in the budgets of these companies, which affected profits; but now with the improvements in security there is a relief, because entrepreneurs no longer have to pay this rent and there are more opportunities to invest profits in more important things.

If it improves by 2024, the economy is projected to grow in the range of 3.0% to 3.5%, driven mainly by private and public investment and tourism in an environment of security and certainty for the population and companies, as well as the recovery of foreign demand, which will favor exports.

Inflation is expected to be between 0.5% and 1.0% this year due to factors such as the behavior of the international price of oil and its derivatives, the continuity of energy matrix diversification projects driven by renewable resources, which will keep electricity prices low, as well as a moderate decrease in food prices.


Translated by: A.M