El Salvador - GFDRR

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IV. ECONOMIC IMPACT
A. IMPACT OF TROPICAL STORM IDA AND THE TROPICAL DEPRESSION
This chapter describes the analysis conducted on the impact that the damages and losses caused by the
disaster will have on large macroeconomic aggregates and on the employment and personal income of
those affected.
Overall Impact of Damages and Losses
The overall impact of damages and losses was estimated on the basis of the sectoral assessment presented
in the previous chapter. An analysis was conducted of the economy’s overall performance before and after
the path of Hurricane Ida.
The total effects of the hurricane, although significant in social terms and considerable at departmental
level, did not reach levels significant enough to substantially alter compliance with the macroeconomic
targets stated by El Salvador’s economic authorities.
The following is a brief overview of economic activity in the 2001–2008 period and in 2009, prior
to the disaster; it then contrasts the expected post-disaster economic situation for 2009 and 2010. This
background information is used to address the economic forecast following the disaster (the gap between
performance with and without the disaster).
a) Pre-disaster Situation: Recent Macroeconomic Performance, 2001–2008
Principal trends. In the past eight years, the Salvadoran economy experienced a moderate, steady growth,
equivalent to an average of 3%, with an annual inflation rate of 4% (see Table 42).
Economic activity showed rising growth rates from 2005 to 2007, mainly driven by the flow of remittances
that the country received, equivalent to 17.6% of the GDP. These turned into an important source
of financing for consumption and investment in an environment of abundant liquidity and low interest
rates. In addition, the contribution of the external sector, especially since 2003, was increasingly negative
because imports grew steadily while exports have remained relatively constant.