ECLAC, the Economic Commission for Latin America, Projects a 2.1% Economic Growth for El Salvador

By Eddie Galdamez  |  Oct 1st, 2023
ECLAC El Salvador Economic Outlook
San Salvador, El Salvador. Image by San Salvador City Hall.

ECLAC, the Economic Commission for Latin America, projects a 2.1% economic growth for El Salvador in 2023. a 0.1% increment from the 2% it estimated last April.

The ECLAC, based in Santiago, Chile, explained in a new report that the world economy “remains on a path of low economic growth” and that “developed countries will continue with their contractionary monetary policies,” despite falls in inflation rates.

El Salvador’s economy will be the one with the lowest growth in Central America in 2023, according to the latest update of the outlook from the Economic Commission for Latin America and the Caribbean.

ECLAC’s Economic Outlook for El Salvador
2017 2018 2019 2020 2021 2022 2023
2.3 2.4 2.5 -7.9 11.2 2.6 2.1

Although ECLAC changed its projection for El Salvador to 2.1% when in April it had been 2%, the data indicate that at the Central American level, it would be last, as it would be the one that will grow the least in 2023.

The estimation of El Salvador being last is what they anticipated last April. Panama, with a 5.1% economic outlook, is the one that will lead economic growth in Central America.

El Salvador trails Nicaragua’s 2.4% economic outlook by 0.3 percentage points. El Salvador’s economic outlook is 1.2% less than the 3.3% ECLAC predicts for Central America.

The 2023 Economic Commission for Latin America outlook for El Salvador is near the 2.2% estimated by the International Monetary Fund economic outlook.

On the other hand, the projection is lower than the 2.8% predicted by the World Bank and the 2.6% of El Salvador’s Central Reserve Bank.

According to the Economic Commission for Latin America, low economic growth is projected to continue.

ECLAC also noted that “although the inflation rate has slowed, it remains above pre-pandemic levels and outside the upper limits set by central banks, which suggests that interest rates will remain relatively high for the rest of the year.”

Furthermore, it also stated that high public debt levels will affect growth in the region. Lastly, high debt, rising domestic and external interest rates, and the decline in tax revenues resulting from lower economic growth will translate to limited fiscal space for the region.