Economic news from El Salvador
The US State Department recently issued its 2023 report on the investment climate in El Salvador . The opening paragraphs of the executive summary of this report offer a pretty good summary of the forces impacting the economy of the country: El Salvador’s location, preferential trade terms under the Central American Dominican Republic Free Trade Agreement (CAFTA-DR), use of the U.S. dollar as legal tender, and recent improvements in the business environment are strengths as an investment destination. Significant levels of sovereign debt, the legacy of decades of gang violence and a lack of transparency in rulemaking are weaknesses. GDP rebounded strongly from the pandemic to 11.2 percent growth in 2021. The economy grew 2.6 percent in 2022. The IMF forecasts real GDP will grow 2.4 percent in 2023. Public debt is on an unsustainable path and creates uncertainty about El Salvador’s ability to honor its future commitments. El Salvador has engaged in negotiations with the International Mo