News

For the closure of this 2018 it is expected a growth of the economy of El Salvador, despite that the growth projections estimated by government institutions and international organisms vary considerably. Something is sure, and is that 2018 will be a positive year for the Salvadoran economy. In the least optimistic of the projections, the economy will grow a 2.8%, which marks a considerable difference compared with the economies of Latin American and the Caribbean that is estimated will close with an average growth of 1.5%.

Not even the fact of being in a pre-election year, nor the even challenging environment regarding the public safety have been an obstacle for the growth of the economy of the country, led by the sectors of quarrying and mines, manufacturing industry and professional services.

The International Monetary Fund, in its report of the visit to the country in November 2018 highlighted:

“In the structural front, the authorities have achieved advances in the reduction of the bureaucracy by introducing the National Registry of Procedures and by presenting the draft legislation for the regulatory simplification to the Legislative Assembly. It is expected that the commerce and competitiveness of El Salvador increases when the process of incorporation to the Customs Union with Honduras and Guatemala finalizes, by the end of November. In terms of governability and crime, the Prosecutor General significantly strengthen the activities of investigation and processing that ensures a transparent use of the public funds. The continued implementation of “Plan El Salvador Seguro” by the current administration and its partners conducted an improvement in the public security. We recommend continued and sustained efforts in these directions, especially regarding governability.”

These prospects of positive economic conditions are strengthen by the sustain growth of the family remittances, that according to reports presented by the Central Reserve Bank in the period of January to October 2018, the remittances have injected to the economy the amount of $4,504 million dollars, represented by a growth of 9.09% compared with the same period of 2017, which has allowed a solid index of private consumption expenditure that represents a very favorable prospect for the accommodation and food sector.

All the above, adding that is expected to be finalized the projects of road infrastructure and in customs financed by FOMILENIO II and the regulatory improvement to facilitate the foreign trade, generates a favorable prospect for the economy in 2019; that in projection is expected to follow its growth rhythm at rates around 2.2% and 3.0%, which opens the door so that El Salvador attracts new foreign investment that allows to grow at an even major rhythm in future exercises.

Mauricio Orellana Caballero
Senior Associate
García & Bodán
El Salvador