El Salvador cuts growth view on coffee damage

Reuters

San Salvador

October 31, 2011

Oct 31 (Reuters) - El Salvador on Monday cut its forecast for growth this year to 1.4 percent from 2.1 percent due to heavy rains that damaged coffee crops in the Central American exporter.

Strong storms hit southern Mexico, Salvador and the rest of Central America for nearly two weeks earlier this month, killing around 130 people and displacing thousands. Central America together with Mexico grows more than one-fifth of the world's arabica coffee.

The rains took a $150 million toll on the country in terms of damage to housing, roads and agriculture, said Alex Segovia from the president's office.

"The biggest impact is on agriculture," he told reporters at a press conference on Monday.

Procafe, the country's coffee association, cut its estimate for coffee production in 2011/12 crop to 1.33 million bags (60-kg bags) earlier this month, from the previous 1.41 million bags due to rain damage.

The new forecast would represent a drop of almost 31 percent to 1.92 million bags produced in the 2010/11 crop, which ended in September.

The region is struggling to rebuild ruined infrastructure ahead of peak harvesting season at the end of the year.