El Salvador

This 2018 Article IV Consultation highlights real GDP growth in El Salvador that was above potential, at 2.3 percent in 2017, supported by lower oil prices, a continued US recovery, and a surge in remittances. However, El Salvador’s growth continues to lag regional peers. Inflation remained low at 1 percent, anchored by dollarization. In 2018–19, growth is expected to remain above potential at 2.3 percent, reflecting the temporary acceleration of US growth from the recent US tax reform and higher grant-financed investment. The fiscal deficit is projected to fall further, to 2.2 percent of GDP in 2018, as savings from pension reform kick in, but to rise to 2.7 percent of GDP in 2019.