Friday, 26 February 2021 20:40

Fusades indicates national economy continues to recover from pandemic

Written by Cindy Moreno

The Salvadoran Foundation for Economic and Social Development (FUSADES) indicated in an investigation, that the national economy is recovering due to the impact generated by the coronavirus pandemic.

FUSADES indicated that it is slow but sure four months after the total reopening of activities.

However, the fourth quarter 2020 Sales Indicator fell to -45.2, down significantly from the previous year (18.5); although slightly less negative than the third quarter (-53.6) of 2020.

In addition, the monthly Sales Indicator in January 2021 plummeted to -49.8, after a recovery in December to -23.1.

According to Pedro Argumedo, researcher of the Department of Economic Studies of FUSADES, the resurgence of covid-19 and the electoral climate deteriorated expectations, contracting consumption and investment.

Based on the indicators of the Quarterly Survey of Business Dynamics conducted by this institution, the economic sectors are recovering at different speeds, by the segmentation into essential and non-essential sectors and the continuity of social distancing.

Thus, for industry it was -38.8 at the end of 2020, in the second quarter it was -66.6, the demand for exports dynamizes the sector. Trade was -41.9 in the fourth quarter of 2020, and in the second quarter it was -83.7.

Construction is down -51.5 at the end of the year, in the second quarter it was -83.7. This sector is doubly affected, because it was considered a non-core sector and the high uncertainty delays decision making. The sector with the lowest index is services, with -56.0 in the fourth quarter of 2020, in the second quarter it was -64.9.

As a positive factor, FUSADES highlights that the world economy improves its projections to 5.5% for 2021, and will overcome last year's major contraction of -3.5%. In addition, the U.S. economy would have a favorable expansion of 5.1% in its gross domestic product in 2021 and will approve a new stimulus package for $1.9 trillion, which will result into higher salvadoran exports, and flow of family remittances.

Therefore, Fusades believes that a public-private agreement must be reached in El Salvador in order to free the energies of the private sector, and reactivate the economy and jobs more quickly.

"94% of employment is generated in the private sector; public finances are without margin due to high indebtedness, so the key will be to focus on improving the business and investment climate to achieve greater prosperity. Additionally, it is crucial to accelerate the vaccination against COVID-19 to achieve collective immunity as soon as possible, which is a necessary condition to reactivate the country", states part of the report.

Last modified on Friday, 26 February 2021 20:42