San Salvador El Salvador. The World Bank lowered El Salvador’s economic growth forecast to 2.9% from 3.2%, a 0.3 percentage point decrease from the June projections.
This marks the fourth time the World Bank has revised its 2024 growth estimate for El Salvador’s economy.
At the start of 2024, the Bank projected a 2.3% economic growth for El Salvador. The estimate increased to 2.5% in April, to 3.2% in June, and then adjusted to 2.9% in October.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|
| El Salvador | -7.9 | 11.9 | 2.8 | 3.5 | 2.9 | 2.7 |
With this latest adjustment, the World Bank’s economic forecast aligns with the lower end of the Salvadoran Central Reserve Bank’s projection, which predicts the Salvadoran economy will grow between 3% and 3.5% this year.
The World Bank’s forecast of 2.9% economic growth is in line with the 3% projected by the International Monetary Fund (IMF) but lower than the 3.5% expected by the Economic Commission for Latin America and the Caribbean (ECLAC).
According to the World Bank’s predictions, El Salvador will have the second-lowest economic growth in Central America in 2024, trailing Costa Rica, Guatemala, Nicaragua, and Honduras but ahead of Panama.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|
| Costa Rica | -4.3 | 7.9 | 4.6 | 5.1 | 4.0 | 3.5 |
| Guatemala | -1.8 | 8.0 | 4.2 | 3.5 | 3.7 | 4.0 |
| Nicaragua | -1.8 | 10.3 | 3.8 | 4.6 | 3.6 | 3.5 |
| Honduras | -9.0 | 12.6 | 4.1 | 3.6 | 3.5 | 3.4 |
| El Salvador | -7.9 | 11.9 | 2.8 | 3.5 | 2.9 | 2.7 |
| Panama | -17.7 | 15.8 | 10.8 | 7.3 | 2.4 | 3.0 |
Costa Rica is projected to have the best economic performance among Central American countries with a growth projection of 4.0%, followed by Guatemala at 3.7%, Nicaragua at 3.6%, Honduras at 3.5%, El Salvador at 2.9%, and Panama at 2.4%.
The Panamanian economy is expected to experience a significant decline from last year’s impressive 7.3%, the highest in Central America.
This downturn is attributed to Panama’s closure of the largest copper mining company in Central America following a Supreme Court ruling of unconstitutionality prompted by widespread protests in October 2023.
Additionally, the crisis in the Panama Canal, often regarded as a driving force of productive activity, has further exacerbated Panama’s economic challenges.
According to the World Bank, El Salvador’s economic outlook presents opportunities and challenges.
The adoption of Bitcoin as legal tender and efforts to attract foreign investment present growth potential. However, tackling problems such as inequality and ensuring fiscal sustainability will be vital for long-term economic stability and prosperity.
