El Salvador: BCR projects growth of 3% to 3.5% in 2024

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By LatAm Reports Editor

According to data provided by the official, this year the economy would grow the same as at the end of 2023.

The Central Reserve Bank (BCR) reported on Thursday that for this year it expects economic growth between 3% and 3.5%.

The president of the BCR, Douglas Rodriguez, said at a press conference that the projection is that the Salvadoran economy “continuing to expand this year.”

“We continue with an economic growth projection of around 3% and 3.5% by 2024, which is expected to execute private investment of $7.205 million and public investment of $791 million,” he explained.

According to data provided by the official, this year the economy would grow the same as at the end of 2023.

The BCR forecast is more optimistic than the one predicted by international bodies for this year.

For example, according to data released by the World Bank in January, El Salvador’s economy will remain in line with the rest of Central American countries, as it projects that the country would achieve 2.3 per cent growth in both 2024 and 2025.

On the other hand, Panama will be at the forefront of the region with a growth of 4.6% and 5.3% in 2024 and 2025, respectively; it is followed by Costa Rica, with an economic expansion of 3.9 % and 3.6 %; then Guatemala will have a growth of 3.5 % in the same period; Nicaragua, with 3.2 % and 3.5 %; then there is Honduras, with 3.2 % and 3.4% in each year.

This projection of the financial entity is in addition to others that have already predicted other international organizations about the Salvadoran economy.

On the other hand, Rodriguez added that for this year the overall inflation rate is expected to continue to fall, between 0.5% and 1%.

“We project as BCR growth of around 3% and 3.5% and that inflation reaches a rate between 0.5% and 1% by the end of 2024,” he said.

Douglas Rodriguez, president of the Central Reserve Bank (BCR), said that this institution maintains its projections of economic growth. Photo: Archive

According to the official, inflation in 2023 closed at 1.2% and stated that El Salvador is “the second country in Latin America with the lowest inflation,” as the average rate in the region is 3.3%.

However, Salvadorans have continued to experience high inflation in food costs and afford the basic basket has become an odyssey of many citizens.

Remittances increase

According to the president of the BCR, from January to February 2024, remittances have reflected a growth of 1.3%. And he stressed that in the first two months of this year they add up to $1,218 million.

“That is the contribution that the Salvadoran diaspora gives to our country, which now no longer sends remittances for consumption but are also increasing remittances for investment. And they are not only increasing in value but also by 82,000 more operations,” he said.

Rodriguez added that between January and February they add $16.1 million more than in the same period of 2023.

The economy in 2023

The head of the Central Bank said that the main “promoter” for the economy to grow 3.5% last year has been security.

“It is the third year in a row that the economy has recorded rates above the average of the last 30 years: 2.1%. The main brake on the economy was violence and crime,” he said.

He indicated that there was an increase in tourism and that 3.4 million tourists visited the country in 2023, 33% more than 2022, or 900,000 additional tourists. That generated more than $3,793 million in foreign currency, a 43 percent increase, he said.

He also explained that there was an increase in the generation and export of energy to Central America, a 15.7% increase in generation and 65.6% in export to the region.

Other growth drivers were public and private investment projects such as slope steps, ports, airports, roads, hospitals, corporate buildings, shopping malls, among others, the official said.

He also cited that hosting international events, such as surf events and Miss Universe, left many currencies to the country.

“A sharp increase in the fourth quarter made us modify our projections of 2.7%… in the fourth quarter we had a 4.5% growth in economic activity,” Rodriguez said.

Last year, 17 of the 19 economic activities registered growth, the main four were: construction, electricity, professional services and leisure services.

This article has been translated from the original which first appeared in El Salvador