El Salvador Economic Forecast

El Salvador Economic Outlook

May 19, 2020

Slowing for the third consecutive month, economic activity growth sank to an 11-month low in February, weighed on by a sharper contraction in the agriculture sector and a significant slowdown in the industrial and construction sectors. The economy will have only deteriorated since February, as the government imposed a national lockdown in mid-March, under which only essential workers can leave their homes for work and most travel is banned, and remittances fell year-on-year in March–April. To help mitigate the financial costs of the pandemic, the government has issued a one-off payment of USD 300 to most households. Meanwhile, to support the government’s finances, the World Bank loaned the government USD 20 million on 17 April and the IMF provided USD 389 million of financial assistance on 14 April. On the political front, uncertainty has increased, as President Bukele extended the state of emergency on 16 May without congressional approval, prompting the Supreme Court to suspend the extension on 18 May.

El Salvador Economic Growth

The economy will contract this year, as coronavirus containment measures hamper activity. Moreover, a struggling U.S. economy will weigh on remittances coming into El Salvador, although the U.S. decision to extend the TPS program for Salvadorans until the beginning of 2021 will provide some stability. Our panelists estimate GDP to fall 3.8% in 2020, which is down 1.9 percentage points from last month’s forecast, before increasing 3.0% in 2021.

El Salvador Economy Data

2015 2016 2017 2018 2019
Population (million)6.56.56.66.66.7
GDP per capita (USD)3,6283,7043,7873,922-  
GDP (USD bn)23.424.224.926.1-  
Economic Growth (GDP, annual variation in %)2.42.52.32.5-  
Consumption (annual variation in %)2.81.52.12.4-  
Investment (annual variation in %)9.03.62.96.8-  
Unemployment Rate7.07.0-  -  -  
Fiscal Balance (% of GDP)-3.3-3.0-2.3-2.5-  
Public Debt (% of GDP)70.872.773.772.8-  
Money (annual variation in %)6.33.410.45.811.3
Inflation Rate (CPI, annual variation in %, eop)1.0-0.92.00.40.0
Inflation Rate (CPI, annual variation in %)-0.70.61.01.10.1
Benchmark Interest Rate (%)4.354.624.394.234.30
Current Account (% of GDP)-3.2-2.3-1.9-4.8-  
Current Account Balance (USD bn)-0.8-0.6-0.5-1.2-  
Trade Balance (USD billion)-4.85.40.05.9-6.1
Exports (USD billion)5.55.40.05.95.9
Imports (USD billion)10.39.81.10.012.0
Exports (annual variation in %)3.9-1.6-100.0102,510,3170.7
Imports (annual variation in %)-2.1-100.07.611.9101,585,361
International Reserves (USD)2.72.93.33.43.9
External Debt (% of GDP)66.468.668.967.1-  

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