Macroeconomic Forecast El Salvador

We are starting to grow increasingly sceptical as to whether the local economy will be able to mount a swift or meaningful recovery in H209-H110. The country suffered its ninth consecutive month of year-on-year remittance contraction in June, with inflows collapsing by 11.6% y-o-y to US$295.7mn. This took first-half remittances to a cumulative US$1.74bn - down a massive 10.3% from the same period a year earlier. Given that total remittances were equivalent to just under a fifth of private consumption in 2008, the reduction in money sent home is a major concern, underpinning our -2.6% real GDP growth forecast this year.

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