El Salvador Economic Forecast

El Salvador Economic Outlook

April 9, 2019

Economic growth in the fourth quarter of 2018 was relatively unchanged compared to Q3, as a rebound in exports offset a slowdown in domestic demand. Moving to Q1 2019, available date suggests the economy likely continued to expand at a moderate pace. On one hand, merchandise exports contracted year-on-year in the first two months of 2019. Moreover, the IVAE volume index of economic activity ebbed in January on slower growth in the financial and insurance activities subsector, which was only partially offset by an acceleration in industrial production. Nevertheless, in the first two months of the year, family remittances remained robust and private sector credit growth was healthy, which bodes well for private consumption.

El Salvador Economic Growth

Growth will decelerate in 2019 as elevated household debt and a slowdown in the U.S. dampen the expansion in household spending. Moreover, high public debt and a potential withdrawal of U.S. foreign aid pose downside risks. Nevertheless, the TPS extension in the U.S. will support family remittances this year, while past structural reforms should support private sector activity. 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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