Caribbean & Central America - August 2011 (ISSN 1741-4458)

El Salvador’s trade deficit increased 19% to US$1.86bn in the first five months of 2011 compared with the same period last year. This is deeply concerning for the government, which is reliant on remittances from Salvadoreans living abroad to cover the trade deficit, although these have fallen short in the last few years as a result of the economic slowdown. Exports totalled US$2.31bn, up 27% on the same period in 2010, while imports soared 24% to US$4.17bn, the central bank announced. The biggest increase was the oil bill, which climbed 31% over the period to US$728m.
The problem for the government is that remittances were up just 4.3% year-on-year in the first six months of the year, to reach US$1.82bn, according to the central bank. This means that there is a US$350m financing gap. Remittances in Guatemala increased at a much faster rate, up 9.5% in the first half of 2011 on the same period last year to US$2.18bn, according to the central bank (Banguat). The president of Banguat, Edgar Barquín, predicted that remittances would break all previous records and reach US$4.5bn in 2011, surpassing the US$4.32bn recorded in 2008 before the onset of the global economic slowdown.

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