1887

Economic Survey of Latin America and the Caribbean 1988

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In 1988, the economic crisis of Latin America and the Caribbean took a dramatic turn. For the first time since the 1981-1983 recession, the per capita product declined to a level equivalent to that of 1978; inflation almost quadrupled to an unprecedented average of 760%, and real incomes declined in most of the countries.

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El Salvador

The Salvadorian economy stagnated in 1988, thereby frustrating the hopes for a more vigorous recovery from the sharp downswings at the beginning of the decade. The gross domestic product grew by only 0.3%, so that its level was 6% below that of 1980, while the per capita product fell by almost 2%, ending up 27% below that of 1978. This unfavourable performance had repercussions on employment, due essentially to the decline of the agricultural and construction sectors. The rate of inflation and the fiscal deficit declined, but the external imbalance —caused principally by the severe contraction of exports in the last few years— persisted, and the international reserves dwindled. Thanks to the strong expansion of transfers from abroad, however, the balance-of-payments situation remained under control.

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