![]() A solid fiscal package can also help El Salvador reduce refinancing risks.Ĭrime and violence are a threat to social development and economic growth in El Salvador and are among the factors driving Salvadorans to migrate. To avoid debt distress, El Salvador requires a fiscal consolidation to improve revenue mobilization and increase spending efficiency, while also protecting the economic recovery and the poor. The fiscal response to the COVID-19 crisis helped mitigate its impacts, cost around 15 percent of GDP and, together with low revenues and rigid expenditures, pushed public debt to beyond 90 percent of GDP. The COVID-19 national vaccination campaign is well positioned, with 66 percent of Salvadoran population being fully vaccinated by March 2022.Ĭhallenges persist for El Salvador, such as the need to advance reforms for fiscal sustainability. El Salvador’s economy is expected to grow by 2.4 percent in 2022 and 2.0 percent in 2023. In 2021, economic growth rebounded to 10.2 percent, supported by remittance-fueled consumption and exports. Inequality is expected to have increased from 0.38 to 0.39. Yet, estimates indicate that poverty would have increased by up to 7.6 percentage points without government mitigation measures. ![]() Poverty increased by 4.6 percentage points between 20. Although El Salvador was quick to adopt strong containment measures against the outbreak and the Government rolled out a robust fiscal response to limit the pandemic’s impact on households and businesses, the pandemic dealt a major blow to growth as GDP declined by 8.1 percent in 2020. The COVID-19 pandemic had a significant negative impact on people’s lives and families’ incomes. The Gini index fell from 0.54 in 1998 to 0.38 in 2019, the lowest in the region. Driven by pro-poor growth and improved shared prosperity, El Salvador became the most equal country in Latin America and the Caribbean (LAC). Extreme poverty, measured as US$1.9 a day, declined from 13 percent in 1995 to 1.5 percent in 2019. The poverty rate (based on a US$5.5 per person per day poverty line) declined from 39 percent in 2007 to 22.3 percent in 2019. Still, the country achieved a significant decline in poverty and inequality. The smallest country in Central America, El Salvador has experienced modest economic growth in recent decades, with annual GDP growth exceeding 3 percent only twice between 20.
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