El Salvador: Keep an eye on the stars and stripes

El Salvador fell behind the region for over a decade but has recently achieved to flip the situation. The economy is expected to register grow figures above its neighbors. Private consumption should remain an important driver of growth. Credit growth has accelerated, supporting economic activity. Foreign direct investment has increased and negatively impacted the current account deficit. 

Monetary policy should remain accommodative in order to support still lagging domestic private sector investment and consumer spending. Inflation is gradually picking up from negative territory and is expected to remain moderate in the following years. Remittances are at their highest level in the country’s history (around 17% of GDP) and capable of financing consumption to a substantial extent