El Salvador Economic Outlook
October 11, 2021Economic growth accelerated to 24.5% year-on-year in the second quarter (Q1: +2.8% yoy), thanks to skyrocketing household consumption, fixed investment and exports. Private consumption benefited from strong growth in remittances in the quarter, while the steep rise in capital expenditure was likely influenced by improved demand and output expectations. Moreover, the sizable expansion in exports reflected a healthier external backdrop. Turning to the third quarter, momentum slowed at the outset of the period amid a less supportive base effect. The monthly economic activity index rose at a softer rate in July, and growth in remittances eased in July–August, likely tempering household spending. Meanwhile, the government tabled its draft 2022 budget on 30 September, which will see spending increase with a focus on public investment, education, and security and defense.
El Salvador Economic GrowthThis year, the economy should regain some of 2020’s pandemic-induced losses. Next year, growth is forecast to cool, partly due to a less favorable base effect and as domestic and foreign demand stabilize. The outlook is clouded by weak fiscal metrics and debt sustainability concerns, as well as IMF warnings over the Bitcoin law’s potential threat to macro stability. Our panelists see GDP expanding 7.4% in 2021 and 2.6% in 2022, which is down 0.2 percentage points from last month’s forecast.
El Salvador Economy Data
5 years of El Salvador economic forecasts for more than 30 economic indicators.
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