El Salvador Economic Forecast

El Salvador Economic Outlook

February 18, 2020

The economy likely accelerated in the fourth quarter of last year, as suggested by faster activity growth in October–November compared to Q3. Strong remittance growth, falling consumer prices and healthy bank lending growth bode well for private consumption in Q4, while the improvement in bank lending should have also supported fixed investment. In further goods news, homicides were reportedly down by one-third in 2019. Nevertheless, the external sector painted a slightly less rosy picture in Q4: Merchandise export growth slowed, while imports continued to contract, albeit at a slower pace. Meanwhile, in politics, consent for additional funding to fight crime was delayed after President Bukele, who was pushing for its approval, controversially entered the Legislative Assembly on 9 February accompanied by armed guards; Assembly President Mario Ponce decried Bukele’s move.

El Salvador Economic Growth

The economy is projected to slow slightly this year due to weaker growth in the United States, which could hamper both remittance and export growth. Supporting momentum, however, will be the U.S. decision to extend the TPS program for Salvadorans until the beginning of 2021. Our panelists estimate GDP growth of 2.2% in 2020, which is down 0.2 percentage points from last month’s forecast, and 2.1% in 2021.

El Salvador Economy Data

2014 2015 2016 2017 2018
Population (million)6.46.56.56.66.6
GDP per capita (USD)3,5303,6283,7043,7873,922
GDP (USD bn)22.623.424.224.926.1
Economic Growth (GDP, annual variation in %)1.72.42.52.32.5
Consumption (annual variation in %)-0.32.81.52.12.4
Investment (annual variation in %)-9.69.03.62.96.8
Unemployment Rate7.07.07.0-  -  
Fiscal Balance (% of GDP)-3.8-3.3-3.0-2.3-2.5
Public Debt (% of GDP)69.570.872.773.772.8
Money (annual variation in %)-0.46.33.410.45.8
Inflation Rate (CPI, annual variation in %, eop)0.51.0-0.92.00.4
Inflation Rate (CPI, annual variation in %)1.1-0.70.61.01.1
Benchmark Interest Rate (%)4.124.354.624.394.23
Current Account (% of GDP)-5.4-3.2-2.3-1.9-4.8
Current Account Balance (USD bn)-1.2-0.8-0.6-0.5-1.2
Trade Balance (USD billion)-5.2-4.85.40.05.9
Exports (USD billion)5.35.55.40.05.9
Imports (USD billion)10.510.30.00.00.0
Exports (annual variation in %)-3.93.9-1.6-100.0102,510,317
Imports (annual variation in %)-2.2-2.1-100.07.611.9
International Reserves (USD)2.72.72.93.33.4
External Debt (% of GDP)65.566.468.668.967.1

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