Macroeconomic Forecast El Salvador

After contracting by 25% y-o-y in May, El Salvador has seen growth of remittances pick up through the summer, with 7.0% y-o-y growth in August. While nowhere near their pre-recession level, this uptrend in growth is a positive sign that El Salvador's remittances are on their way towards a modest recovery and in line with our end-2011 forecast of an average of 6.1% growth. That said, there is still the downside risk that if the US experiences a prolonged slowdown, remittance growth will once again slow, and with it domestic demand.

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