Our comprehensive assessment of El Salvador's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect El Salvador, as well as the latest industry developments that could impact El Salvador's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in El Salvador before your competitors.
El Salvador Country Risk
El Salvador Industry Coverage (7)
El Salvador Agribusiness
BMI View: Â The region is still struggling with disease outbreaks in the coffee sector in 2013/14. We believe the region will continue to suffer as low global coffee prices limit investment potential. Even if prices have rebounded recently, we believe they are overstretched and see them going back towards the USc140-150/lb level in the near term. Central America is generally dependent on imports for corn, and we expect the production deficit to widen over our forecast period. That said, Central America is expected to remain self-sufficient in sugar and even increase its potential for sugar exports. The sugar industry has the potential to attract investment over the medium term.
|Coffee & Sugar Ahead Of The Rest|
|Central America - BMI Market Value By Commodity (% of total)...|
El Salvador Autos
BMI View: Â The outlook for the autos industry in the Central Americas region in 2014 is modest, with tepid sales growth expected in some markets, but contractions likely in others. This is broadly in line with our outlook for the Latin America region, although many markets in Central America are very small in volumes terms, and modest changes in sales figures could have a relatively large impact on the year-on-year (y-o-y) growth rate.Â
Income distribution across much of the region is highly unequal, and the majority of headline spending growth comes from the relatively wealthy sections of the population. This income structure is likely to continue to restrict growth in the regional autos sector.
Food & Drink
El Salvador Food & Drink
The region's economic trajectory remains divergent. Despite our expectations for slower real GDP growth in Panama in the next several years, it will remain the regional outperformer. On the other hand, we have a more mixed outlook for growth in the 'northern triangle' countries. While they will likely benefit from improved agricultural yields and stronger US demand for manufactured goods, Guatemala, Honduras and El Salvador are still vulnerable to significant structural macroeconomic weaknesses.Â
Headline Industry Data (regional averages)
2014Â per capita food consumption (USD) = +4.82%; forecast compound annual growth rate (CAGR) 2013 to 2018 = +4.18%.
2014 alcoholic drink sales (litres) = +4.41%; forecast CAGR 2013 to 2018 = +2.30%.
2014 soft drink sales (litres) = +5.01%; forecast CAGR...
El Salvador Infrastructure
BMI View: There is a wide divergence of performance and opportunities across the various construction industry markets in Central America. With comparatively low levels of risk, we expect Panama and Costa Rica to continue to lead both in terms of industry value and real growth. With regards to the region's underperformers, Guatemala and El Salvador continue to report the lowest level of growth but we anticipate this to change over the medium term as there is significant potential in both markets for the development of transport infrastructure.
We see high risks, small scale and limited growth opportunities across the region as a whole. A crucial factor underpinning our forecasts for infrastructure investments in future years is political risk. This is a particular concern in El Salvador, Honduras, and Guatemala where high levels of crime, homicide, violence, and insecurity exacerbate...
El Salvador Insurance
BMI View: Collectively, the six insurance markets of Central America represent a medium-sized, and quite rapidly growing, market opportunity. The insurers themselves, and their corporate clients, have proven themselves to be resilient in the face of challenging business environments. Many companies are innovating in both distribution and products to increase insurance penetration in their markets .
BMI expect Central American insurance markets to continue to grow rapidly in the coming years. The annual average growth is forecast to be between 7.8% - 11.3% (Guatemala is the lowest and Nicaragua the highest). Â We would highlight Panama and Costa Rica as markets which will outperform in absolute terms. Consumers in these insurance markets have the greatest ability to afford insurance and the insurance companies that operate are established and able...
Pharmaceuticals & Healthcare
El Salvador Pharmaceuticals & Healthcare
BMI View: Costa Rica and Panama will continue to outperfor m other Central American countries, namely El Salvador, Guatemala, Honduras, Nicaragua and Belize . The business-friendly environment, high per-capita medicine spending and strong consumer demand still present strong revenue-generating opportunities for multimodal pharmaceutical companies.
Headline Expenditure Projections
Pharmaceuticals: USD3.5bn in 2013Â to USD3.7bn in 2014; +4.1%. Our forecast has been revised slightly down since Q314 due to less promising industry data.
El Salvador Telecommunications
BMI View: Rise of number porting services and high penetration rates across Central America show that the local population is embracing the competition and keen to switch for a better deal. BMI believes that due to the strong competition it will be more difficult for new entrants, such as Xinewei , to penetrate the market as they would have to undercut the local providers. Mobile forecasts show much slower growth across the board, with only Nicaragua offering any real growth potential. Thus companies are investing heavily into 3G and 4G networks to boost mobile data use. The future for telecoms operators lies in the expansion of content and encouraging consumers to use their mobile connections for a growing range of lifestyle needs. Regional market leader Tigo has been most...