El Salvador Economic Outlook
September 14, 2021The economy likely expanded at a rapid pace in the second quarter, accelerating from Q1’s rebound, albeit partly due to a favorable base effect. In June, economic activity continued to grow solidly, with household consumption likely receiving a boost from stronger growth in remittances in the quarter. Moreover, growth in merchandise exports and imports skyrocketed in Q2, hinting at healthier demand dynamics. Momentum seems to have carried over into Q3, with remittances continuing to grow strongly in July, albeit at a softer pace, and merchandise imports posting another robust expansion in the same month. However, in August authorities banned mass gatherings through at least 10 October, which could be weighing on activity. Meanwhile, a recently proposed constitutional reform, which aims to extend the presidential term, has sparked outcry amid accusations of authoritarianism.
El Salvador Economic GrowthThe economy is forecast to return to growth this year on the back of firming domestic and foreign demand, amid the gradual easing of lockdown measures at home and abroad. That said, the outlook is clouded by weak fiscal metrics and debt sustainability concerns. Moreover, IMF warnings over the Bitcoin law’s potential threat to macro stability further cloud the outlook. Our panelists see GDP expanding 6.0% in 2021, which is up 1.0 percentage points from last month’s projection, and 2.8% in 2022.
El Salvador Economy Data
5 years of El Salvador economic forecasts for more than 30 economic indicators.
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