El Salvador Economic Forecast

El Salvador Economic Outlook

November 6, 2018

The economy likely had a modest performance in the third quarter of 2018, after it expanded at the highest rate year-on-year in three quarters in Q2. Economic activity in July increased at a slower annual pace than in June as growth in the construction sector dropped and the agriculture sector continued to contract. On the external front, the merchandise trade deficit widened in Q3 by over 30% compared to the same quarter a year earlier due to higher imports. Meanwhile, the government outlined its budget proposal for 2019 in late September. The budget proposes a large rise in expenditure, financed by higher borrowing.

El Salvador Economic Growth

In 2019, economic growth should remain unchanged from 2018. Although higher oil prices will weigh on the external sector’s growth contribution, higher remittance inflows from the United States should support private consumption, at least until the Temporary Protected Status program in the U.S. potentially ends in September 2019. Our panelists expect GDP growth of 2.3% in 2019, which is up 0.1 percentage points from last month’s forecast, and 2.0% in 2020.

El Salvador Economy Data

20132014201520162017
Population (million)6.36.36.36.36.4
GDP per capita (USD)3,5163,5963,6713,7723,895
GDP (USD bn)22.022.623.223.924.8
Economic Growth (GDP, annual variation in %)2.42.02.42.62.3
Consumption (annual variation in %)3.30.02.11.30.7
Investment (annual variation in %)6.9-6.42.23.80.8
Unemployment Rate5.97.07.07.0-  
Fiscal Balance (% of GDP)-4.0-3.8-3.3-3.0-2.3
Public Debt (% of GDP)67.769.571.673.474.1
Money (annual variation in %)3.1-0.46.33.411.4
Inflation Rate (CPI, annual variation in %, eop)0.80.51.0-0.92.0
Inflation Rate (CPI, annual variation in %)0.81.1-0.70.61.0
Benchmark Interest Rate (%)2.853.483.643.933.53
Current Account (% of GDP)-6.9-5.3-3.2-2.1-2.0
Current Account Balance (USD bn)-1.5-1.2-0.7-0.5-0.5
Trade Balance (USD billion)-5.2-5.2-4.8-4.4-4.8
Exports (USD billion)5.55.35.55.45.8
Imports (USD billion)11.711.511.39.811.6
Exports (annual variation in %)3.4-3.93.9-1.66.3
Imports (annual variation in %)4.8-2.2-2.1-4.57.8
International Reserves (USD)2.72.72.72.93.3
External Debt (% of GDP)63.965.565.768.564.5

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