San Salvador, El Salvador Capital City
El Salvador is expected to post the slowest economic growth in Central America in 2025 and 2026, according to the International Monetary Fund’s (IMF) latest Global Economic Outlook, released on October 2025.
The IMF maintained its 2025 growth forecast for El Salvador at 2.5%, unchanged from previous estimates, signaling a continuation of moderate expansion amid fiscal tightening. The projection also places the country behind all other Central American economies in expected performance.
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
|---|---|---|---|---|---|---|
| El Salvador | 11.9 | 2.8 | 3.5 | 2.6 | 2.5 | 2.5 |
For 2026, the IMF projects a growth rate of 2.5%, down from 3.5% in 2023 and 2.6% in 2024, indicating a gradual deceleration in output under current economic policies.
Since President Nayib Bukele’s administration signed a program with the IMF in February 2025, the institution has anticipated a 2.5% growth rate, reflecting the effects of a three-year fiscal adjustment aimed at curbing public spending.
The Central Reserve Bank (BCR) has yet to issue its own GDP projection for 2025. The latest available data—covering the second quarter of this year—showed a 4.1% annual increase, primarily driven by construction activity.
Across the region, Panama is forecast to lead Central America once again, with growth of 4% in 2025 after a sluggish 2.7% in 2024. That slowdown was attributed to the Panama Canal’s water crisis and the shutdown of a major copper mine.
Guatemala and Honduras are each projected to grow 3.8% this year, while Costa Rica will expand 3.6%, a slight dip from 4.2% in 2024. Nicaragua rounds out the region with a 3% forecast for 2025.
Looking ahead to 2026, the IMF expects Panama’s economy to continue growing steadily at a rate of 4%. Guatemala’s expansion is projected to ease to 3.6%, Honduras’ to 3.5%, Costa Rica’s to 3.3%, and Nicaragua’s to 2.9%.
The IMF report describes Latin America and the Caribbean as entering a phase of moderate yet stable growth, with inflation easing and fiscal pressures mounting. Trade tensions and high financing costs continue to weigh on regional prospects.
Meanwhile, the IMF raised its forecast for the U.S. economy slightly, now expecting growth of 2% in 2025 and 2.1% in 2026, supported by substantial investment in artificial intelligence and lower-than-expected tariff impacts.
