Economy Question i need help?

Question

What does this all mean "El Salvador has the third largest economy, but growth has been modest in recent years. Robust growth in non-traditional exports have offset declines in the maquila exports, while remittances and external aid offset the trade deficit from high oil prices and strong import demand for consumer and intermediate goods."

Answer 1

Congratulations on going to the CIA Factbook. But Wikipedia is also your friend:

http://en.wikipedia.org/wiki/El_Salvador

So what is it that you don't understand?

1. Central America has 7 countries. El Salvador is the smallest in area with 21,040 sq km as compared with 22,966 for Belize (the next smallest) and 129,494 for Nicaragua (the largest).

http://en.wikipedia.org/wiki/Central_Ame...

2. El Salvador has a GDP of about $41.65 B and a GDP/capita of $5,800. This places it #95 in the world, behind Belize (at $7,900 per capita) but well ahead of Nicaragua (at $2,600)

http://en.wikipedia.org/wiki/List_of_cou...

3. The traditional export was coffee. But as a commodity, coffee prices are volatile: sometimes high and sometimes low. So the government has been looking for alternative sources of growth.

4. The maquila exports were the output of factories in El Salvador making goods for the U.S. market in the various free-trade zones established by the government.

http://en.wikipedia.org/wiki/Maquila

Most of these were associated with clothing and so with the rise of the Chinese economy, etc. haven't been doing so well either.

Looking at the CIA Factbook page, you can see that other exports now include sugar, shrimp, chemicals, and electricity and that much of the exports go to El Salvador's neighbors.

5. Many people from El Salvador have gone to the U.S. to work and send back money. These are the remittances and account for about $3.32 billion, that is more than 16% of the GDP.

6. External aid - $267.6 million of which $55 million from US (2005) - is much less of a factor, but every little bit helps.

7. El Salvador imports all of its oil, and even before the most recent rise in oil prices has had an inflation rate of 3.9%. The Wikipedia page notes: From 2000 to 2006 total exports have grown 19% from $2.94 billion to $3.51 billion. During this same period total imports have risen 54% from $4.95 billion to $7.63 billion. This has resulted in a 102% increase in the trade deficit from $2.01 billion to $4.12 billion.[15]

*. And the Gini index of 52.4 shows that the rich not only have most of the money, they even have a higher percentage than in most countries, including the U.S.

http://en.wikipedia.org/wiki/Gini_coeffi...

https://www.cia.gov/library/publications...