El Salvador country brief

Overview

Australia and El Salvador enjoy warm relations, based on trade, investment and cooperation on a range of international issues, including the environment, agricultural development, climate change, transnational crime, disarmament and strong people-to-people links. Australia is home to the third largest Salvadoran community living abroad.

The two countries established diplomatic relations in 1984, when Australia’s first Ambassador to El Salvador, Cavan Hogue, presented credentials. The Australian Embassy in Mexico City is accredited concurrently to El Salvador. Australia has an Honorary Consul in San Salvador. El Salvador opened an Embassy in Australia in 2013.

El Salvador is situated in the norther half of the Central American isthmus, with a coastline on the Pacific Ocean and land borders with Honduras and Guatemala. El Salvador, Nicaragua and Honduras share a coastline along the Gulf of Fonseca, a closed sea under international law. El Salvador is a tropical country with a rainy season (May to October) and a dry season (November to April) on the coast and temperate uplands.

El Salvador’s population is approximately 6.1 million (2016 est). 50 per cent of the population identify as Catholic and 36 per cent as Protestant. Spanish is the official language of El Salvador.

Political overview

Explored and settled by the Spanish in the 16th century, El Salvador broke with Spain in 1821 and joined the First Mexican Empire. It was part of the United Provinces of Central America until 1838 when it broke away and became an independent state. In 1992, the government and leftist rebels signed a treaty to end a 12-year civil war, which cost around 75,000 lives.

System of government

El Salvador has a democratically elected representative government with a strong executive. The President, who is the head of state and government, is elected for a five-year term by absolute majority in a second round if necessary. The 84-member unicameral Legislative Assembly is elected for a three-year term with members directly elected in multi-seat constituencies and a single nationwide constituency elected by proportional representation.

Recent developments

The government of the left-wing Frente Farabundo Martí para la Liberación Nacional (FMLN), led by President Salvador Sánchez Cerén, took office in June 2014. President Cerén is pursuing a moderate approach to policymaking. The government also lacks a legislative majority and is unable to pass reforms without minority party support. Political polarisation is rising as the government faces a budget negotiation impasse with the opposition focused on pension reform.

The next legislative elections are due in March 2018 and the next presidential elections in February 2019.

Foreign and trade policy

El Salvador is a member of the Organisation of American States, the Community of Latin American and Caribbean States (CELAC) and the Central American Integration System (SICA). It is an observer of the Pacific Alliance.

The government's foreign policy priority will continue to be the maintenance of close relations with other Central American countries, and with the United States, El Salvador’s key trade and investment partner, and home to 2.1m Salvadorans whose remittances are an important source of revenue for El Salvador’s dollarized economy.

El Salvador is one of the three countries (along with Guatemala and Honduras) which make up the "Northern Triangle", and benefits from a multi-year US development and security aid package, known as the Alliance for Prosperity, approved in November 2014.

El Salvador recognises Taiwan as the Republic of China.

El Salvador, collectively with Central America and the Dominican Republic, has FTAs with the United States (since 2009) and the European Union (since 2012).

Bilateral relations

The first group of 75 El Salvadorans arrived in Australia in 1983 under the Special Humanitarian Program, during El Salvador’s civil war. Between 1983 and 1986, Australia accepted a further 10,000 Salvadorans. The Salvadoran community in Australia is estimated at 20,000.

Australia and El Salvador both participate in the Forum for East Asia-Latin America Cooperation (FEALAC) and the WTO Trade in Services Agreement negotiations. Australia is an observer of SICA.

In 2001, the Australian Government established the Council on Australia-Latin America Relations (COALAR) which aims to enhance commercial, political and cultural relations between Australia and Latin America. Since its inception, COALAR has been active in promoting business, education, tourism and cultural links between Australia and Latin America. For updates on COALAR activities and information on the annual grants program, follow COALAR on Facebook.

People to people links

Around 400 Salvadorans visited Australia in 2015-16.

Salvadorans are eligible to apply for Australia’s Endeavour Awards Scholarships and Fellowships. The program opens annually in April and closes in June.

Development assistance

Since 2010, El Salvador has been eligible to receive Australia Award Fellowships and three have been granted to date.

From 2010 to 2014, Australia provided $100 million in official development assistance to Latin America, including 250 Australia Awards scholarships. El Salvador received 16 Australia Awards Scholarships. The regional program has now closed, though some activities that have already been funded will continue until 2018.

The Australian Embassy in Mexico City manages a Direct Aid Program (DAP), which provides financial support to a broad range of projects in El Salvador, including community development projects and those designed to address challenges in vulnerable communities. In 2016-17, two Direct Aid Projects were funded: $41,015 to implement agro-ecological systems to reduce climate change vulnerabilities through OXFAM El Salvador; and $41,135 to build rainwater tanks to improve the quality of life in San Vicente and La Paz Community in El Salvador.

Economic overview

For latest economic data refer to El Salvador [PDF 35 KB]

Economic directions

The smallest country in Central America geographically, El Salvador has the fourth largest economy in the region. With the global recession in 2009, real GDP contracted and economic growth has since remained low, averaging less than two per cent from 2010 to 2014, but recovered somewhat in 2015-16 with an average annual growth rate of 2.4 per cent. Remittances accounted for approximately 17.1 per cent of GDP in 2016 and were received by about a third of all households. Consumer prices declined in eight of the twelve months in 2016, resulting in annual deflation of 0.9 per cent at end-2016.

Economic outlook

Economic growth in El Salvador is expected to average two per cent annually in 2017-18, amid fiscal constraints and weak investment. Deflationary pressures will dissipate in 2017, but consumer prices will stay contained, with inflation expected to rise to 1.5 per cent by end-2018. Dollarisation and modest commodity price rises will keep inflation at an average of 1.4 per cent in 2019-21.

Trade and investment

Economic and trade relationship

In 2016, two-way trade was around $41 million with Australian exports of dairy products ($8.8 million) and aluminium ($6.4 million) the two largest trade items. Two Australian companies operate in El Salvador.

Export opportunities

Despite the modest nature of two-way trade, Australian companies are taking advantage of niche opportunities to provide professional services throughout the region. The Australian Government, through our post in Mexico City and our Austrade representation there, helps raise the profile of Australian companies and ensures that Australian businesses and exporters are well positioned to make the most of emerging opportunities. Australia’s Honorary Consul in San Salvador also assists the Australian Embassy in Mexico to identify commercial opportunities in El Salvador.

Clean energy and environment

El Salvador is developing potable water and wastewater treatment plants. Opportunities in this sector are likely to continue to grow.

High level visits

  • February 2017: Australia’s Special Envoy for Human Rights, the Hon Phillip Ruddock MP, visited El Salvador
  • September 2016: Vice-Minister of Foreign Affairs Carlos Castaneda visited Australia
  • October 2012: Parliamentary Secretary for Foreign Affairs, Richard Marles MP, visited El Salvador
  • September 2012: Vice Foreign Minister Juan Jose Garcia visited Australia
  • December 2011: Foreign Minister Kevin Rudd visited El Salvador

Last updated July 2017.


Last Updated: 6 July 2017