El Salvador Economic Forecast

El Salvador Economic Outlook

June 11, 2019

The economy had a poor start to the second quarter of 2019, following a likely downbeat first quarter of the year. Annual growth in economic activity slowed to a near four-year low in April due to a contraction in the agricultural, industrial, trade, transport and storage, and ICT sectors. In addition, remittances and merchandise exports both fell in April compared to the same month a year earlier and, with the U.S. economy set to cool in Q2, El Salvador’s economy will likely feel the effects. Meanwhile, in politics, President Nayib Bukele was sworn into office on 1 June and lost no time in firing several government officials, including relatives of former President Salvador Sánchez Cerén, via Twitter.

El Salvador Economic Growth

This year, the economy is projected to lose momentum, despite the extension of the TPS program in the U.S. and recently pledged multilateral financial support for El Salvador. 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 1.8% 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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