El Salvador Economic Forecast

El Salvador Economic Outlook

November 7, 2017

The economy performed strongly in Q3, according to the latest indicators: Annual growth in economic activity was strong in both July and August; remittance inflows were 10.4% higher in September compared to last year; and exports grew at a healthy rate throughout the quarter. In early October, Fitch Ratings upgraded its long-term foreign currency rating for El Salvador to B- following the approval of a pension reform bill by Congress on 28 September. Fitch’s outlook for the country remained stable. On 31 October, the Ministry of Agriculture and Livestock said that recent good weather bodes well for a strong 2017–18 coffee harvest season.

El Salvador Economic Growth

Growth next year should be supported by robust exports and remittance inflows. While concerns over debt sustainability continue to cloud the outlook, the approval of the pension reform bill in September indicates a cooperative congress on fiscal policy matters going forward. Our panelists expect GDP to expand 2.1% in 2018, which is unchanged from last month’s forecast. For 2019, they expect GDP to grow 2.0%.

El Salvador Economy Data

20122013201420152016
Population (million)6.16.16.16.16.1
GDP per capita (USD)3,9233,9994,1034,2504,358
GDP (USD bn)23.824.425.126.126.8
Economic Growth (GDP, annual variation in %)1.91.81.42.32.4
Consumption (annual variation in %)2.41.01.62.41.2
Investment (annual variation in %)-1.49.3-6.48.1-0.1
Unemployment Rate6.15.97.0-  -  
Fiscal Balance (% of GDP)-3.5-3.6-3.4-3.0-2.7
Public Debt (% of GDP)60.961.166.263.765.5
Money (annual variation in %)1.02.20.26.63.1
Inflation Rate (CPI, annual variation in %, eop)0.80.80.51.0-0.9
Inflation Rate (CPI, annual variation in %)1.70.81.1-0.70.6
Benchmark Interest Rate (%)2.572.853.483.643.93
Current Account (% of GDP)-5.4-6.5-4.8-3.6-2.0
Current Account Balance (USD bn)-1.3-1.6-1.2-0.9-0.5
Trade Balance (USD billion)-4.9-5.3-5.2-4.9-4.5
Exports (USD billion)5.35.55.35.55.3
Imports (USD billion)10.310.810.510.49.9
Exports (annual variation in %)0.62.8-4.04.0-2.7
Imports (annual variation in %)2.95.0-2.4-0.9-5.4
International Reserves (USD)3.22.72.72.72.9
External Debt (% of GDP)56.157.759.458.460.7

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