San Salvador El Salvador. On April 10, the World Bank improved El Salvador’s economic growth outlook from 2.3% to 2.5%. However, the forecast is lower than the official Salvadoran Central Reserve Bank (BCR) forecast, which estimates a rate of between 3% and 3.5%.
The World Bank’s 2024 projection for the country is the lowest economic growth outlook for Central America. El Salvador and Panama are tied for last place with a 2.5% projected growth.
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|---|
| 2.3 | 2.4 | 2.5 | -7.9 | 11.2 | 2.6 | 2.7 | 2.5 |
The World Bank’s forecast of 2.5% economic growth is lower than the 3% to 3.5% projected by El Salvador’s Central Reserve Bank (BCR) and the 3% predicted by the International Monetary Fund (IMF).
However, it is higher than the 2.0% expected by the Economic Commission for Latin America and the Caribbean (ECLAC).
“We are seeing 2.5% growth for El Salvador, which compared to the rest of the countries in Central America is a little smaller,” expressed William Maloney, chief economist of the World Bank for Latin America and the Caribbean.
El Salvador and Panama at the Bottom in Central America
According to the figures presented by the World Bank, Panama, and El Salvador will be the countries with the lowest economic growth this year in Central America.
The multilateral organization projects that the economies of these countries will grow by 2.5% this year.
Costa Rica is poised to lead Central America in economic growth, with a projected rate of 3.9%, followed by Nicaragua at 3.7%, Honduras at 3.4%, and Guatemala at 3%.
The Panamanian economy is expected to experience a significant decline from its 6.5% growth rate in 2023, the highest in Latin America, to 2.5%.
This downturn is attributed to the closure of the largest copper mining company in Central America following a Supreme Court ruling of unconstitutionality prompted by widespread protests in October 2023.
Additionally, the crisis in the Panama Canal, which is considered an engine of productive activity, has further contributed to Panama’s economic challenges.
Latin America Economic Outlook
The World Bank (WB) updated its growth forecasts for Latin America and the Caribbean; it reduced the figure by seven-tenths to 1.6% from the previous estimates in January. The WB reduction is mainly due to the economic situation in Argentina.
Among the major Latin American economies, Brazil is projected to grow by 1.7% this year and 2.2% next year, compared to the previous estimates of 1.5% and 2.2% in January, respectively. Meanwhile, Mexico is expected to grow by 2.3% in 2024 and 2.1% in 2025, down from the previous estimates of 2.6% and 2.1%, respectively.
Chile is expected to achieve a growth rate of 2%; Colombia’s growth is projected at 1.3%, while Costa Rica is forecasted to grow by 3.9%. Ecuador is anticipated to grow by 0.7%, Peru by 2.7%, Uruguay by 3.2%, and Panama by 2.5% and 3.5%.
To sum up, El Salvador’s economic outlook presents a mix of opportunities and challenges. With the adoption of Bitcoin as legal tender and efforts to attract foreign investment, there is potential for growth.
However, addressing issues like inequality and fiscal sustainability will be crucial for long-term economic stability and prosperity.
