The Salvadoran economy has not marched as expected after it closed with 1.4 per cent in the second quarter of the year, the lowest rate since the pandemic.
The World Bank applied a reduction in El Salvador’s economic growth outlook from 3.2 per cent to 2.9 per cent by 2024.
For this year, we are seeing 2.9 % for El Salvador and 2.7 % for the following year, said William Maloney, chief economist for Latin America and the Caribbean at the World Bank, on Wednesday, during the update of the economic outlook for the region.
This is the third time that the World Bank has changed the growth perspective of the Salvadoran economy in 2024: in January it predicted a rate of 2.3%, but then improved it in June to 3.2 percent, aligned with the official forecast.
I believe that the region, El Salvador, Costa Rica and the Dominican Republic, have enormous potential for growth. Again, with a creative and aggressive approach to attract these opportunities of nearshoring. William Maloney, chief economist for Latin America and the Caribbean at the World Bank
Usually the perspectives of multilateral agencies – MSF, World Bank or ECLAC – resume official data, which in the Salvadoran case the Central Reserve Bank (CRCR) estimated last June that growth will be between 3 % and 3.5 per cent.
The dynamism of the Salvadoran economy moves away from the optimistic scenarios after a 1.4 %Its lowest rate since the covine pandemic in 2020.
In addition, the growth rate of gross domestic product (GDP) was halfway from 3.01 per cent in the first quarter of 2024, and far from 4.5 per cent reported in the second quarter of 2023.
According to the BCR, seven of the 19 GDP-forming activities suffered a contraction in the second quarter.
The brake on the economy responded to a strong contraction in the construction industry of 14.5 per cent, for the first time since the end of 2021, a sector that was the engine of productive activity in the last two years with growth rates of up to 20 per cent.
The manufacturing industry – which includes maquila and considered an export engine – accumulated nine consecutive quarters in contraction after closing at -0.49 % in the second quarter.
The World Bank’s growth scenario for 2025 is also far from the rate considered for drawing up next year’s overall nation budget, from a3.2 %. Jerson Posada Molina, Minister of Finance, said this week that we are being quite cautious about the projection.
This article has been translated after first appearing in Diario El Mundo