El Salvador Economic Forecast

El Salvador Economic Outlook

May 14, 2019

The economy likely grew at a steady pace in the first quarter, after growth stabilized in the final quarter of last year. Between January and March, remittance inflows increased at a pace that was similar to the healthy growth recorded in Q4 2018, suggesting private consumption made a broadly unchanged contribution to economic growth. On the external front, merchandise exports fell in Q1, while imports rose robustly. This suggests the external sector likely dragged on the economy once more. Further signaling steady growth, monthly economic activity in January–February averaged a growth rate that was consistent with Q4’s. Meanwhile, the World Bank approved a USD 200 million project on 17 April to strengthen municipal institutions in El Salvador.

El Salvador Economic Growth

The economy is projected to lose momentum this year, despite the extension of the temporary protection status program in the U.S. and multilateral financial support. A foreseen slowdown in the U.S. and elevated household debt will weigh on consumer spending, while a potential cut in U.S. aid to El Salvador also poses a downside risk. 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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