Breaking its own economic growth projections for 2023 of 2.7%, as well as those of international financial entities forecasting lower indicators, the Central Reserve Bank (BCR) announced yesterday that El Salvador’s economy, measured by Gross Domestic Product (GDP), grew by 3.5% at the close of 2023.
According to the state bank’s estimations, with information available until yesterday, the nominal value of El Salvador’s GDP in 2023 was $34,015.62 million, marking an increase of $2,026.7 million compared to the GDP of 2022.
«The main driver of our economic growth is the successful strategies and measures implemented by our President Nayib Bukele regarding national security, aware that for decades the main impediment to economic growth was violence and crime. Last year, we became the safest country in the Western Hemisphere, and now we also emerge as a secure tourist destination, the most visited in Central America,» stated Douglas Rodríguez, head of the BCR.
Regarding annual GDP growth, the official detailed that in 2019 there was a growth of 2.4%; in 2020 it fell by -7.9%, due to the effects of the COVID-19 pandemic; in 2021, it rebounded with an 11.9%; continuing with 2.8% in 2022 and showing a significant upturn of 3.5% in 2023.
«This is the third consecutive year that the Salvadoran economy has recorded rates higher than the 30-year average of 2.1%. The country is experiencing a rebirth and living a new economic reality,» emphasized the official.
On a quarterly scale, last year the economy grew by 1.6% in the first quarter; in the second quarter by 4.4%; in the third by 3.4%; and in the fourth, it surged to 4.5%. «A strong increase in the fourth quarter of 2023 (4.5%) led us to modify our growth projection, which was at 2.7%,» Rodríguez pointed out.
From a production standpoint, at the close of 2023, according to the BCR, growth was observed in 17 of the 19 activities that make up the GDP, with the following annual increases standing out: construction (17.9%); electricity (14.6%); professional and technical services (11.1%); recreational services (10.2%); financial services (7.5%); administrative and support services (4.5%); communications (4.1%); and government services with 3.9%.
Regarding economic growth projections for 2024, the BCR estimates it will range from 3.0% to 3.5%, mainly driven by private and public investment and tourism in an environment of security and certainty for the population and businesses, as well as the recovery of external demand, which will favor exports.
On the other hand, the state bank anticipates inflation this year to range between 0.5% and 1.0% due to factors such as the behavior of international oil prices and their derivatives, the continuity of energy matrix diversification projects driven by renewable resources, which will keep electricity prices low, as well as a moderate decrease in food prices.