El Salvador Economic Forecast

El Salvador Economic Outlook

January 18, 2022

The economy grew at a softer, but still-solid pace of 11.7% year-on-year in the third quarter, down from the 25.8% expansion logged in Q2. The slowdown in growth reflected easing domestic and external demand. Domestically, private consumption and investment increased at softer rates, while public consumption growth accelerated. On the external front, exports of goods and services rose at a markedly reduced pace. Meanwhile, momentum continued to ease at the outset of the fourth quarter. Economic activity increased at a notably softer pace in October due to contractions in the industrial, construction and financial sectors. This partly offset a stronger expansion in the agricultural sector and still-robust growth in the trade sector. Further, merchandise export growth eased somewhat in October–November. More positively, remittances growth picked up notable steam in the same two months.

El Salvador Economic Growth

Economic growth is set to ease notably this year amid a less favorable base effect. That said, domestic and external demand should continue to firm on the back of softer restrictions on activity. However, the balance of risks is skewed to the downside due to weakened fiscal metrics and concerns over debt sustainability and macro stability, as well as the ongoing pandemic. Our panelists see GDP expanding 2.8% in 2022, which is up 0.1 percentage points from last month’s forecast, and 2.3% in 2023.

El Salvador Economy Data

2015 2016 2017 2018 2019
Population (million)6.56.56.66.66.7
GDP per capita (USD)3,6283,7103,7953,9324,031
GDP (USD bn)23.424.225.026.127.0
Economic Growth (GDP, annual variation in %)2.42.52.32.42.4
Consumption (annual variation in %)2.81.52.12.4-  
Investment (annual variation in %)9.03.63.66.79.6
Unemployment Rate7.07.0-  -  -  
Fiscal Balance (% of GDP)-3.3-3.0-2.3-2.5-2.9
Public Debt (% of GDP)70.872.673.672.773.3
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)-3.2-2.3-1.9-4.7-2.1
Current Account Balance (USD bn)-0.8-0.6-0.5-1.2-0.6
Trade Balance (USD billion)-4.8-4.4-4.8-5.9-6.1
Exports (USD billion)5.55.45.85.95.9
Imports (USD billion)10.39.810.611.812.0
Exports (annual variation in %)3.9-1.66.32.50.6
Imports (annual variation in %)-2.1-4.57.611.91.6
International Reserves (USD)2.72.93.33.43.9
External Debt (% of GDP)66.468.568.867.0-  

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