El Salvador: The oil bill is coming

Research evidence excerpt

El Salvador: The oil bill is coming

J P M O R G A N Latin America Economic Research

23 July 2026

• We are revising our current account forecast to -4% of GDP from -5.3% on a Emerging Markets Economic and

better-than-expected 1Q outturn and a more limited near-term oil hit, though Policy Research

the latest oil spike keeps risks tilted to a wider deficit. Mariana Zepeda

• The 1Q narrowing looks partly temporary, with oil pass-through more back- (1-212)mariana.n.zepeda@jpmorgan.com272-0919

loaded and 2Q risks skewed to a wider goods deficit.

Katherine Marney

• Services should improve as inbound tourism strengthens, but cooling (1-212) 834-2285

remittance momentum remains the key headwind for the external account. katherine.v.marney@jpmorgan.com

J.P. Morgan Securities LLC

• Recorded financial inflows helped cover the 1Q deficit, but didn’t fully explain

reserve resilience.

• Reserves remain at record highs, supported by fiscal consolidation and strong

USD inflows, but are beginning to flatten.

• In 1Q, the key offset was a large positive errors & omissions, adding

uncertainty about what is really driving flows.

Although El Salvador’s external accounts faced notable pressure as oil prices rose

in 1Q, near-term risks to the current account are easing. In light of the U.S.-Iran

agreement, oil price stabilization, and a smaller-than-expected 1Q CAD, we are

revising our current account forecast to -4% of GDP (from -5.3%) as the near-term

hit from higher oil import costs appears more limited than feared. That said, the

recent renewed spike in oil prices underscores that the energy shock remains a key

upside risk to the deficit, and persistent headwinds, most notably cooling

remittance momentum, should keep the current account under pressure, leaving