El Salvador Economic Forecast

El Salvador Economic Outlook

February 12, 2019

The economy likely performed fairly well in the fourth quarter. Economic activity growth accelerated in November, driven mainly by faster growth in the construction sector and a solid rebound in the financial and insurance activities sector, while in annual terms merchandise exports recovered firmly in Q4 from the third quarter’s contraction. Moreover, family remittances were healthy, although the annual rate of expansion ebbed from Q3. On the political front, Nayib Bukele won February’s presidential elections. Bukele appears more business friendly than the outgoing FMLN leader, but the future direction of economic policy is still uncertain and a divided parliament will make comprehensive reform difficult.

El Salvador Economic Growth

Growth should dip this year, although solid domestic demand and past structural reforms will support private-sector growth. Elevated public debt and the possible termination of the temporary protected status for Salvadorians residing in the U.S. pose downside risks. Our panelists expect GDP growth of 2.3% in 2019, which is unchanged from last month’s forecast, and 1.9% in 2020.

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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