Salvadoran Economy Grows, but Slowly

In the first nine months of the year, the Volume Index of Economic Activity and the sales indicator of FUSADES reported positive variations, however, they are lower compared to what was recorded in the same period of 2018.

Thursday, November 28, 2019

According to the "Economic Situation Report up to November 2019", prepared by the Salvadoran Foundation for Economic and Social Development (FUSADES), the Salvadoran economy has experienced a tendency to lose dynamism, in the second quarter of 2019, economic activity grew only 1.98%, which is lower than the 2.71% recorded a year ago.

"... This trend continued in the third quarter, as reflected by other indicators, such as the Economic Activity Volume Index (IVAE) and the FUSADES sales indicator. The latter has shown growing net balances during the first three quarters of 2019 which, however, are lower than those recorded in the first three quarters of 2018," the document explains.

The report adds that "... The lower dynamism is also reflected in the generation of formal employment. According to figures from the Salvadoran Social Security Institute (ISSS), the number of contributing workers registered a 1.8% growth in July and 0.8% in August 2019. In the twelve months ending in August, a net increase of only 6,645 jobs was reported: 3,388 in the private sector and 3,257 in the public sector.

In the monthly survey Percepción de los Consumidores the employment situation is investigated. Consistent with what has been said in the previous paragraph, the percentage of people who consider that it is difficult to obtain employment at present far exceeds those who consider it to be easy: the net balance has remained around -80 in recent years and as of September 2019 no significant changes have been observed.

The investment climate indicator, which had remained negative since 2008, showed a positive net balance in the third quarter. Businessmen attribute it to expectations in the new government (44%) and to the reduction they perceive in citizen insecurity (16%). On the other hand, businessmen who perceive it as unfavorable, the factors remain the same: political uncertainty or policies that could implement the new government (23%) and crime (20%), however, the mention of these factors was reduced, especially uncertainty.

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The Sales Indicator of the Salvadoran Foundation for Economic and Social Development (FUSADES), reported a negative variation in the first quarter compared to the same period in 2018, going from 16.5 to -7, which is explained by the behavior of the four economic sectors surveyed, reported the Foundation.

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