San Salvador El Salvador.
SAN SALVADOR, El Salvador — El Salvador’s economic outlook took another hit this week as the World Bank downgraded its 2025 growth projection to 2.2%, placing the country at the bottom of Central America’s economic forecast rankings for the second time in less than a year.
The revised estimate, published Wednesday, is a 0.5 percentage point drop from the 2.7% figure forecast in October 2024 and reaffirmed in January.
The downgrade follows a similar move by the International Monetary Fund (IMF), which adjusted El Salvador’s 2025 growth projection from 3% to 2.4% on Tuesday.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
|---|---|---|---|---|---|---|---|
| El Salvador | -7.9 | 11.9 | 3.0 | 3.5 | 2.6 | 2.2 | 2.4 |
The Central Reserve Bank of El Salvador (BCR) has yet to release its official forecast for 2025. In 2024, the Salvadoran economy grew by 2.6%, falling short of the government’s projected range of 3.5% to 4%.
Looking ahead, the World Bank anticipates a modest recovery in 2026 with a growth rate of 2.4%, still trailing the 3% and 3.5% growth seen in 2022 and 2023.
The new forecasts were presented during the World Bank and IMF Spring Meetings in Washington, where global economic uncertainties—primarily driven by escalating trade tensions initiated by U.S. President Donald Trump—dominated discussions.
Carlos Felipe Jaramillo, the World Bank’s Vice President for Latin America and the Caribbean, cited increased global uncertainty and urged the region to implement “bold reforms” to improve competitiveness and productivity.
Central America Economic Growth Forecast
Regionally, the World Bank painted a more pessimistic picture than the IMF. According to the IMF, Guatemala is poised to lead Central American growth in 2025 with an expected rate of 4.1%.
The World Bank estimates Guatemala, Costa Rica, and Panama will grow by 3.5%, Nicaragua by 3.4%, and Honduras by 2.8%.
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | |
|---|---|---|---|---|---|---|---|
| Guatemala | -1.8 | 8.0 | 4.2 | 3.5 | 3.7 | 3.5 | 3.8 |
| Costa Rica | -4.3 | 7.9 | 4.6 | 5.1 | 4.3 | 3.5 | 3.7 |
| Panama | -17.7 | 15.8 | 10.8 | 7.4 | 2.9 | 3.5 | 3.7 |
| Nicaragua | -1.8 | 10.3 | 3.8 | 4.6 | 3.6 | 3.4 | 3.3 |
| Honduras | -9.0 | 12.6 | 4.1 | 3.6 | 3.6 | 2.8 | 3.4 |
| El Salvador | -7.9 | 11.9 | 3.0 | 3.5 | 2.6 | 2.2 | 2.4 |
Latin America and the Caribbean are forecast to post the lowest regional growth worldwide—2.1% in 2025 and 2.4% in 2026.
The World Bank warned that persistent fiscal deficits, trade uncertainty, and reduced foreign aid constrain regional growth.
It also emphasized that protectionist measures and the slowing Chinese economy undermine confidence in nearshoring and market stability.
Among the hardest-hit countries is Mexico, which the World Bank expects to record zero growth in 2025 due to its exposure to trade restrictions from the U.S.
