According to the IMF and CIA World Factbook, El Salvador has the third largest economy in the region, behind Costa Rica and Panama, when comparing nominal Gross Domestic Product and purchasing power GDP El Salvador's GDP per capita stands at US$4,365.
El Salvador's economy has been hampered at times by natural disasters such as earthquakes and hurricanes, by government policies that mandate large economic subsidies, and by official corruption. Subsidies became such a problem that in April, 2012, the International Monetary Fund suspended a $750 million loan to the central government. President Funes' chief of cabinet, Alex Segovia, acknowledged that the economy was at the "point of collapse."
Antiguo Cuscatlán has the highest per capita income of all the cities in the country, and is a center of international investment.
GDP in purchasing power parity (PPP) in 2008 was estimated at $ 25.895 billion USD. The service sector is the largest component of GDP at 64.1%, followed by the industrial sector at 24.7% (2008 est.). Agriculture represents only 11.2% of GDP (2010 est.)
The GDP grew after 1996 at an annual rate that averaged 3.2% real growth. The government committed to free market initiatives, and the 2007 GDP's real growth rate was 4.7%.
In December 1999, net international reserves equaled US $1.8 billion or roughly five months of imports. Having this hard currency buffer to work with, the Salvadoran government undertook a monetary integration plan beginning January 1, 2001 by which the U.S. dollar became legal tender alongside the Salvadoran colón, and all formal accounting was done in U.S. dollars. Thus, the government has formally limited the implementing of open market monetary policies to influence short-term variables in the economy. As of September 2007, net international reserves stood at $2.42 billion.
It has long been a challenge in El Salvador to develop new growth sectors for a more diversified economy. In
