After the reopening phases that were supposed to be applied in El Salvador were declared unconstitutional and the restrictions to economic activities were removed, businessmen receive the news with optimism, but fear that some businesses have closed down because of the crisis.
Since March, when the first cases of covid-19 began to be registered in the country, the administration headed by Nayib Bukele decided to subject the country to a strict home quarantine.
In a context of slowdown in industrial activity and loss of jobs, the industrialists' union of El Salvador calls for a policy of attracting investment through incentives and reviewing and taking advantage of existing trade agreements.
El Salvador's industrial sector registered a 0.9% growth in the first half of 2019, two percentage points less than last year during the same period, a fact that shows that economic growth in El Salvador remains slow and low, remaining at 2%, reported the Salvadoran Association of Industrialists (ASI).
Faced with the threat of a global economic slowdown and the possibility of the U.S. entering recession next year, businessmen in the region argue that to mitigate possible adverse effects, it is key to diversify export destinations.
Market analysts assure that the slowdown in U.S. economic activity is already a reality, and that what is still not clear, is the possibility that the economy will go into recession next year.
Due to the crisis affecting Nicaragua and paralysis of construction in Panama between April and May, the IMF has reduced the expectation of economic growth for the Central American region from 4% to 3.3%.
The International Monetary Fund (IMF) cut growth forecasts for the Central American economy, due to the uncertainty caused by the situation in Nicaragua and its effect on the region's economic activity, and the impact of the construction strike in Panama, which has halted works on 260 projects nationwide for the last 30 days.
Salvadoran business owners point out that the main causes of the country's poor economic performance is still growing insecurity and a lack of a clear political course.
The Salvadoran business chambers agree that the beginning of the year has not been the best, since the obstacles that for several months have made it difficult to operate and grow private sector activities still remain.
Despite a recovery in exports, the difficulties in attracting foreign investment and the meager growth in credit to the private sector explain the projections for this year.
The National Foundation for Development (FUNDE) believes that the performance of the Salvadoran economy this year was very fragile, and they expect to close the year with growth of between just 2% and 2.3%, which barely exceeds the growth rate.
El Salvador's 'CCC' Long-Term ratings reflect Fitch's assessment that political polarization complicating the sovereign's ability to meet its financing gap for 2017-2018, continues, highlighting the risk for default.
From a statement issued by Fitch Ratings:
Fitch Ratings-New York-28 July 2017: Fitch Ratings has affirmed El Salvador's Long-Term Foreign and Local Currency IDRs at 'CCC'.
Fusades' most recent report points to the loss of 33,000 formal jobs between November 2016 and March this year, the second biggest drop in the last 25 years.
From the report by Fusades:
At the end of 2016 and early in 2017 there is clear deterioration in the country's economic conditions, which was reflected in the loss of 33,110 formal jobs between November 2016 and March 2017 and in the default of public debt in April 2017.
The 4.6% growth in activity in the agricultural sector accounted the most for the meager increase of 2.4% in GDP last year.
From a statement issued by the Central Bank of El Salvador:
The Salvadoran economy has maintained its good economic performance, growing above historical averages, as at the end of 2016 growth of 2.4% was reported, while for 2017 it is expected that the rate will be 2.3%, according to the Central Bank.In addition to the preliminary results recorded in 2016 and the revision of 2015 data, the institution presented the economic growth projections for the years 2017-2019.
Official figures show an increase of 7% in credit extended to private sector companies up until April 2016.
From a report by the Central Bank of El Salvador:
In the international environment it was highlighted that the US maintains its strong labor market and its annual inflation is close to 1%.At the level of international prices it shows that the value of oil continues to increase, but remains at lower levels than previous years.
"In the second quarter of 2015 slow economic growth remain and public finances continue to deteriorate, increasing the risk of fiscal unsustainability".
From a report by the Salvadoran Foundation for Development (Fusades) "Economic Situation in Q2 2015":
In the second quarter of 2015, economic growth remains low despite the external positive effect of falling oil prices.
The National Foundation for Development is predicting better economic performance in 2015 driven by FOMILENIO projects but warns of the need to adjust public spending.
From a statement issued by the National Development Foundation (FADE):
In 2014 the low growth in economic activity persisted. The IVAE recorded growth of 0.4% in September, indicating, with a very high probability that GDP growth will be below 2.0%.
The Central Bank projects that, as in 2014, private consumption will be driven by growth in remittances which will remain the main engine of the economy in 2015.
A statement of the Central Reserve Bank of El Salvador reads:
The President of the Central Bank, Dr. Oscar Cabrera, presented the latest results of various economic indicators of the country and the growth prospects for El Salvador for next year, said a spokesperson for the institution..