El Salvador Economic Forecast

El Salvador Economic Outlook

October 9, 2018

Annual economic growth accelerated in the second quarter of 2018, according to GDP data released by the Central Bank in September. This represented the highest growth rate in three quarters and came on the back of strong private consumption growth, which was buoyed by higher remittance inflows. Moreover, government consumption, fixed investment and exports all increased. In the coming weeks, El Salvador is expected to join the customs union between Guatemala and Honduras which, along with expanded ferry links with Costa Rica, should support the external sector in the face of instability in neighboring Nicaragua.

El Salvador Economic Growth

This year and next, economic growth should remain broadly unchanged from last year. Although higher oil prices will weigh on the external sector’s contribution, higher remittance inflows from the United States should support private consumption, at least until the Temporary Protected Status program in the U.S. potentially ends in September. Our panelists expect GDP growth of 2.3% in 2018 and 2.2% in 2019, which is down 0.1 percentage points from last month’s forecast.

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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