The Roman Catholic Church in El Salvador has joined growing calls for President Nayib Bukele to uphold the country’s ban on gold mining, a policy that has been in place since 2017. Archbishop José Luis Escobar Alas urged the president to retain the ban, warning that lifting it would cause irreversible damage to the nation’s environment.

In a statement on Sunday, Escobar Alas stated, “It will damage this country forever,” adding his voice to concerns raised by various civic and environmental groups. His remarks came after President Bukele expressed opposition to the seven-year-old ban, calling it “absurd” in a post on X (formerly Twitter) on Wednesday. Bukele suggested that unmined gold represents untapped wealth that could transform the country, triggering further debate on the issue.

El Salvador’s ban on metal mining, which applies both above and below ground, was implemented in 2017 to protect the country’s precious water resources from contamination. A broad coalition, including environmental groups and the Catholic Church, supported the measure at the time, citing the risks posed by mining operations to the country’s water supply.

While gold and silver deposits had been discovered in the country, no large-scale mining had begun by the time the ban was enacted. However, it is unclear what El Salvador’s full gold reserves may be. Bukele’s recent comments, however, mark a shift from his stance during his 2019 presidential campaign, when he supported the mining ban.

The president has since suggested that “modern and sustainable” mining could be introduced, with a focus on environmental responsibility. However, environmental advocates have rejected this notion, asserting that such mining practices are not as environmentally friendly as claimed.

Amalia López of the Alliance Against the Privatisation of Water emphasized the dangers of mining, saying, “It’s not true that there’s green mining; it’s paid for with lives, kidney problems, respiratory issues, and leukemia that aren’t immediate.” Critics are particularly concerned about the significant water consumption required for mining operations and the challenges of safely storing water contaminated with heavy metals.

Given Bukele’s political dominance, with his party controlling a majority in the legislature and the opposition weakened, the potential for a formal proposal to lift the mining ban could face little resistance. However, the strong opposition from environmental groups and the Catholic Church signals that the debate over the future of gold mining in El Salvador is far from over.

Annual inflation in the eurozone increased slightly to 2.3% in November, up from 2% in October, according to preliminary data from Eurostat released on Friday. The rise aligns with market expectations and reflects diminishing deflationary pressure from energy prices.

Despite the uptick in annual inflation, monthly data revealed a 0.3% decline in consumer prices compared to October — the steepest drop since January 2024. This decline signals potential easing of underlying price pressures, bolstering hopes that the eurozone’s disinflationary trend is intact and could pave the way for the European Central Bank (ECB) to lower interest rates in December.

Energy prices, a key inflation driver, were down 1.9% year-on-year in November, although the rate of decline has moderated compared to 4.6% in October and 6.1% in September. On a monthly basis, energy prices edged up by 0.6%.

Core inflation, which excludes energy and food prices, rose slightly to 2.8% year-on-year, up from 2.7% in October. However, monthly core inflation fell by 0.4%, hinting at easing underlying price pressures. Services prices, a historically “sticky” component, rose 3.9% annually but recorded a significant 0.9% monthly decline, offering a positive outlook for inflation.

Economic Outlook and ECB Policy

The November inflation figures align with expectations that disinflation remains a dominant force. This trend strengthens the case for the ECB to lower interest rates during its December meeting, particularly as economic activity across the eurozone continues to weaken.

Recent Purchasing Managers’ Index (PMI) data underscores the region’s economic struggles. The Eurozone Composite PMI dropped to 48.1 in November, down from 50.0 in October, marking the sharpest contraction since January. While the manufacturing sector remains in decline, the services sector has also slipped into contraction for the first time in 10 months, with its PMI falling to 49.2 from 51.6.

Kyle Chapman, a forex market analyst at Ballinger Group, remarked, “The market expects a 25-basis-point cut in December. While the economy isn’t collapsing, the ECB has room to cautiously adjust rates without frontloading aggressive cuts.”

German Retail Sales Plunge

Germany, the eurozone’s largest economy, reported its steepest retail sales drop in two years. Retail sales fell by 1.5% month-on-month in October, far exceeding market expectations of a 0.3% decline. This drop follows a 1.6% rise in September and highlights the ongoing challenges in consumer spending.

The weak retail performance reflects deteriorating consumer confidence, adding to concerns about the region’s economic fragility.

Market Reactions

Financial markets remained stable following the data. The euro traded at $1.0560 against the US dollar, while Germany’s 10-year Bund yield held at 2.12%, its lowest level in nearly two months.

Equity markets were flat, with the Euro STOXX 50 index unchanged. Gains from Airbus SE and Schneider Electric SE balanced declines in Telefonica and Banco Santander.

As the ECB prepares for its next policy decision, the region’s economic and inflation dynamics remain in sharp focus.