Zona Rosa San Salvador. SAN SALVADOR, El Salvador — According to its latest World Economic Outlook, released in April 2025, the International Monetary Fund (IMF) projects that El Salvador’s economy will grow by 2.47% in 2025.
The revised projection, released Tuesday in the IMF’s latest World Economic Outlook, falls short of the 3% estimate issued by the Fund in October 2024 and trails the country’s 2.6% GDP growth recorded last year.
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
|---|---|---|---|---|---|---|
| El Salvador | 11.9 | 2.8 | 3.5 | 2.6 | 2.5 | 2.4 |
The IMF attributes the modest outlook to fiscal tightening measures adopted under a $1.4 billion Extended Fund Facility (EFF) agreement reached earlier this year.
Under President Nayib Bukele, the Salvadoran government committed to a fiscal adjustment totaling 3.5 percentage points of GDP over three years starting in 2025.
The plan aims to reduce public spending and boost state revenues, stabilizing public finances and restoring investor confidence.
Despite these efforts, the IMF anticipates economic growth will remain subdued through 2026, hovering around 2.5% annually due to the short-term effects of fiscal consolidation.
Longer-term prospects look more promising. The Fund forecasts that El Salvador’s GDP growth could increase to 3% in the medium term, driven by structural reforms and improved market sentiment.
Central America Economic Outlook
El Salvador continues to lag behind its Central American peers. The IMF projects that in 2025, the country will post the region’s lowest economic growth rate.
In contrast, Guatemala is expected to lead with a 4.1% expansion, overtaking Costa Rica. Panama, rebounding from a 2024 mining sector slowdown, is forecast to grow by 4%, followed by Costa Rica at 3.4%, Honduras at 3.3%, and Nicaragua at 3.1%.
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
|---|---|---|---|---|---|---|
| Guatemala | 8.0 | 4.2 | 3.5 | 3.7 | 4.1 | 3.8 |
| Panama | 15.8 | 10.8 | 7.6 | 2.9 | 4.0 | 4.0 |
| Costa Rica | 7.9 | 4.6 | 5.1 | 4.3 | 3.4 | 3.4 |
| Honduras | 12.5 | 4.1 | 3.6 | 3.6 | 3.3 | 3.4 |
| Nicaragua | 10.3 | 3.8 | 4.4 | 3.6 | 3.2 | 3.1 |
| El Salvador | 11.9 | 2.8 | 3.5 | 2.6 | 2.5 | 2.5 |
SEE ALSO: Living in El Salvador: Top Reasons for Moving to El Salvador
Global economic uncertainty has been exacerbated by the renewed trade conflict ignited by U.S. President Donald Trump’s administration.
While the IMF cautioned that rising tensions could cloud global growth prospects, it stopped short of forecasting a worldwide recession.
“We are entering a new era in which the global economic system that has functioned for the past 80 years has been reset,” said IMF Chief Economist Pierre-Olivier Gourinchas.
