Macroeconomic Forecast El Salvador

BMI View: Real GDP growth came in at 4.2% y-o-y in Q108, a significant moderation from 4.9% in Q407, signalling to us that the domestic economy is starting to feel the negative impact of slowing US demand and higher input costs. That said, we remain generally encouraged by the level of resilience exhibited so far by the country, and expect economic expansion to remain at decent levels this year and next. We are forecasting real GDP growth of 3.7% this year and 3.6% in 2009. The main risk is a sharper than expect fall in domestic demand growth, which has held up reasonably so far this year.

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