El Salvador Economic Forecast

El Salvador Economic Outlook

July 10, 2018

Annual economic growth accelerated in the first quarter of 2018 from the fourth quarter of 2017. Private consumption expanded at the fastest pace in nearly two years, benefitting from increased remittances from abroad, and investment was supported by healthy credit growth. On the other hand, decreased government consumption and the increased cost of oil imports both weighed on growth in Q1. These dynamics appear to have continued into Q2: Strong remittances were recorded in May, but the oil bill surged in the same month.

El Salvador Economic Growth

The economy should benefit from strong remittance inflows this year, partly due to a strong U.S. economy, supporting private consumption. However, higher oil prices will weigh on the external sector, while the ending of the Temporary Protected Status program in the U.S. in late 2019 could hit remittances in the medium term. Our panelists expect GDP growth of 2.3% in 2018, which is unchanged from last month’s forecast, and 2.3% again in 2019.

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 %)3.1-0.46.33.410.4
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)10.710.510.39.810.6
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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