BCR reported a contraction of -10.2% in gross domestic product in the third quarter of the year, adding up to six consecutive months of negative growth.
El Salvador’s economy is officially in recession, after experiencing six consecutive months of negative growth, recording a contraction of -10.2% of gross domestic product (GDP) in the third quarter of the year, according to data from the Central Bank of Reserve (BCR).
In the first quarter of 2020, GDP rose by 0.8%, but in the second it fell by -19.22%, and the gloomy outlook remained at -10.2% for the next three months between July and September. .
The recession, colloquially known as the “weak period”, was the product of the closure of thousands of companies that generated more than 85,000 redundancies, reduced consumption and, in turn, depressed investment as part of a long-term closure that the Government has applied since March due to the COVID-19 pandemic.
However, in its report, BCR indicated that the contraction of -10.2% shows “an unprecedented recovery in the 2005-2020 series”, as it considers that it is lower than in the second quarter.
Experts had warned about this economic situation since the end of September, however, at that time, BCR had not yet published official data.
READ ALSO: El Salvador will shrink by more than 8% in its economy in 2020
At that time, the former head of that institution and the president of the Foundation for the Development of Central America (FUDECEN), Oscar Cabrera, estimated that between April and May economic production fell by 13.7%, and for the third quarter from July to September it was projected that the decrease would be -9.4%, despite the official data that in the last period there was a contraction of -10.2%.
Despite the fact that the economy has started to open gradually since July, companies are not recovering. The El Salvador Chamber of Commerce and Industry confirmed in September last year that sales remained at 50% and even now there are companies that have failed to open or recruit staff.
“The economy has not stopped declining,” said Waldo Jiménez, economic manager of the National Association of Private Enterprises (ANEP).
And he says this will be maintained for the rest of 2020, because the coronavirus vaccine has not yet been confirmed and Salvadorans will have to learn to live with it.
Cabrera noted that in 2009, when an economic and financial crisis began, it took the country four years to regain the level of jobs it had in 2008, but now, with this recession, it is likely that El Salvador will take up to 10 years to recover.
“Consumption and investment expenses recovered after four years. We can now take a decade because, as the pandemic continues, all countries in the world will reduce their trade channels, “he explained.
The 2020 Economic and Fiscal Situation Report presented by the National Development Foundation (Funde) confirmed that El Salvador still does not show an economic recovery from a year-on-year perspective; According to the Economic Activity Volume Index (IVAE), there has been a decrease in economic dynamism of 8.1% since September compared to the same month of the previous year. As for gross domestic product (GDP), the second quarter shows a contraction of 19.2%.
The foundation explained that the effects of the pandemic spread to all economic sectors, the most affected being trade, construction, professional services and industry, registering decreases in economic activity of 19.84%, 19.48%, 11.24% and 9 , 63%, respectively.
YOU MAY BE INTERESTED: 72,000 jobs have not yet been recovered according to ANEP