The San Salvador economy has evolved from conservative fiscal management and free market initiatives. It includes the privatization of electrical distribution, public pensions, banking system, telecommunications and electrical distribution. Over the years, the liberated market conditions has given strong focus on the elimination of price controls, reduction of import duties and reinforced intellectual property rights.
San Salvador has a great environment of macroeconomic stability with the rate of GDP rising at a moderate and steady space since 1992, when the peace accords had signed. For many years San Salvador has been treated as a mono-exporter economy, as the entire economy was only depended on single type of export. The currency transformation took place in year 2001, when the colon was replaced by the dollar. This major change has resulted in lower interest rates in San Salvador that has assisted many people in securing easy credit for their car or a house. With the execution of US dollar as a legal currency, all accounting after year 2001 has undertaken in US dollar format. This way has assisted government in controlling the long term and short term variables of the economy. After year 2004, the colon currency has stopped its circulation and never used in city for any type of trading.
As a capital of El Salvador the city San Salvador possesses many economical activities like construction materials, food production, beverages, chemical and pharmaceutical industries and handicrafts market. The famous companies in El Salvador like Costa Rica, Grupo TACA, Grupo Real, Grupo Roble has their headquarters in San Salvador. The banking sector of San Salvador includes banks such as HSBC, Citibank, Banco Promérica, Mexican Banco Azteca and Banco Pro-Credit. The giant insurance companies like as Mapfre-La Centroamericana Asesuisa, SISA, and Scotia Seguros hold their strong market share in San Salvador. The inequality in allocation of income is the most important problem faced by an economy of San Salvador. Apart from this the right fiscal policy, is one of the greatest challenges for the government of San Salvador.
Currently, the focal point of San Salvador will be to develop new emerging growth sectors for a diversified type of economy. In coming years, government will focus on escalating the collection of revenues with a great emphasis on indirect taxes. The ultimate financial goal of San Salvador will be to support and foster upcoming growth sectors, which will contribute to a prosperous future of San Salvador.
