Macroeconomic Forecast El Salvador

BMI View: Workers remittances rose by just 0.7% y-o-y in April, the lowest rate of growth in five years. That outturn took year-to-date expansion to 3.3% y-o-y for the first four months of the year. Clearly, the impact of a ailing housing market and construction sector in the US is taking its toll on incoming flows. Given that workers remittances represent a key driver of private consumption, the slowdown underpins our more modest real GDP growth forecasts in 2008. We see the economy expanding by 3.7% this year from an estimated 4.7% in 2007.

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