El Salvador Economic Forecast

El Salvador Economic Outlook

March 12, 2019

The economy likely gained speed in Q4 2018 as reflected by the monthly economic activity index showing a year-on-year acceleration in the quarter, led by growth in retail, construction and financial activities. Moving to Q1 2019, available data appears to paint a mixed picture: While merchandise exports contracted year-on-year in January for the third consecutive month, healthy family remittances growth in January should have continued to drive private consumption. Moreover, in early March the U.S. Department of Homeland Security extended temporary protected status until 2 January 2020 for El Salvador, boding well for remittances and private consumption this year.

El Salvador Economic Growth

Growth is seen decelerating in 2019, as elevated household debt and a slowdown in the U.S. drags on private consumption growth. Nevertheless, the TPS extension will likely support family remittances, while past structural reforms should support private-sector activity. Our panelists expect GDP growth of 2.3% in 2019, which is unchanged from last month’s forecast, and 1.9% 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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