The World Bank (WB) has revised its growth forecast for El Salvador in 2024, projecting a 2.5% expansion. This slight improvement comes as William Maloney, the WB’s chief economist for the region, announced the updated projection during a press conference on Wednesday.
The 2.5% growth estimate for 2024 marks a modest increase from the WB’s October 2023 report, which anticipated a growth rate of only 2.3% for the country.
However, these figures fall short of the projections by the Central Reserve Bank (BCR), which anticipated growth between 3% and 3.5% for the year. The BCR’s optimism is underpinned by factors such as improved security conditions and continued growth in sectors like construction.
During the virtual conference, WB representatives also highlighted their forecast for Latin America and the Caribbean, predicting a 1.6% growth in Gross Domestic Product (GDP) for the region in 2024. This subdued growth outlook is attributed to low levels of investment and domestic consumption, high interest rates, significant fiscal deficits, declining commodity prices, and uncertainty surrounding key partners like the United States, China, and Europe.
Looking ahead, the WB expects GDP growth to reach 2.7% in 2025 and 2.6% in 2026. However, William Maloney expressed concern over these figures, stating that they are the lowest among all regions globally and insufficient to drive prosperity.
Carlos Felipe Jaramillo, WB Vice President for Latin America and the Caribbean, emphasized that sustained low growth is not merely an economic statistic but a barrier to development. He noted that it leads to reduced public services, fewer job opportunities, depressed wages, and increased poverty and inequality. Jaramillo urged decisive action to break this cycle and foster development in the region.
Despite these challenges, Maloney highlighted the region’s positive management of inflation, attributing it to decades of solid macroeconomic reforms. He noted that regional inflation, excluding Argentina and Venezuela, stands at 3.5%, compared to 5.7% in OECD countries. Maloney expressed confidence that most countries in the region would achieve their inflation targets by 2024.