Wednesday, 08 February 2023 01:40

El Salvador's GDP will grow 1.7% in 2023 and 1.5% in 2024: IMF

Written by Evelyn Alas

The International Monetary Fund (IMF), explained that Latin American economies held up well last year despite shocks stemming from the Russian invasion of Ukraine and global interest rate hikes.

In 2022, the region's economy expanded by almost 4%, employment rebounded strongly and the services sector recovered from the damage inflicted by the pandemic.

The institution projects that El Salvador's Gross Domestic Product (GDP) will grow 1.7% in 2023, 1.5% in 2024. Inflation for El Salvador will be 2% for this year and 1.5% for next year.

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According to the IMF, growth for the region this year is set to slow to just 2%, in a context of higher interest rates and lower commodity prices.

Both job creation and consumer spending on goods and services are slowing, and consumer and business confidence is weakening.

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Growth will also be constrained by a slowdown in trading partners, particularly the United States and the eurozone.

In addition, downside risks remain predominant, such as those stemming from possible tighter-than-expected financial conditions and Russia's war in Ukraine.

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The return of inflation to the targets set by central banks is likely to be a prolonged process and exposed to risks, for example due to increased wage pressures.

The Fund recommends that to reverse these trends and the impact of the pandemic, macroeconomic stability must be restored and growth stimulated in a lasting manner through structural reforms.

 

Translated by: A.M