In a recent report, the U.S. bank JP Morgan – the largest financial institution in the nation – has raised its economic growth forecast for El Salvador in 2023. The previous projection of just under 2.5%, as stated in their earlier report, has now been revised upward to an impressive 3.9% in the report published this month.
The financial institution attributes this improvement to the country’s recent signs of economic acceleration, a decrease in inflation, and a positive trend in fiscal accounts. Elaborating on the reasoning behind the revised forecast, JP Morgan states, “Data has consistently shown optimism over the past few months in El Salvador, featuring reduced inflation rates, positive trends in fiscal accounts, and more recently, indications of economic acceleration.”
Furthermore, the report highlights the robust momentum observed in sectors like construction. The bank states, “We don’t observe one-off or transient factors driving growth in the economy; rather, we see signs of synchronized momentum: manufacturing appears to be picking up pace, construction is booming, and other indicators related to domestic demand are performing well.”
JP Morgan also notes the “impressive” trend of decreasing fiscal deficits despite an increase in public investment. This achievement is particularly noteworthy as it defies expectations and demonstrates the effectiveness of El Salvador’s fiscal management strategies.
In response to the upgraded growth forecast, President Nayib Bukele took to Twitter, stating, “I told you so,” in reference to prior predictions by other institutions that the country would not experience growth this year.
This upgraded outlook from JP Morgan aligns with the positive economic indicators that El Salvador has been showcasing in recent months. The combination of increased economic activity, controlled inflation, and sound fiscal management seems to be steering the country towards a path of steady growth.
As the nation continues to navigate its economic landscape, the revised growth forecast offers a vote of confidence in El Salvador’s economic policies and their potential to yield positive outcomes. With sectors such as construction propelling the economy forward and fiscal discipline remaining a priority, El Salvador appears to be making strides toward a more prosperous future.