El Salvador Economy Surpasses Expectations with 4.5% Growth Projection

El Salvador's economy has posted better-than-expected growth performance, according to the International Monetary Fund (IMF). The IMF announced a staff-level agreement on September 3 covering the combined second and third reviews of El Salvador's 40-month Extended Fund Facility program. This deal is expected to unlock approximately $140 million pending Board approval.

The real story, however, is the growth number. The IMF projects a 4.5% real GDP growth rate for El Salvador in 2026, building on a 2025 performance of 3.9%. Private consumption and investment are driving this turnaround, supported by strong remittance flows and a tourism sector gaining momentum.

Security improvements have also played a significant role. Foreign investors are more willing to deploy capital when the operating environment is stable, and El Salvador's crackdown on gang violence has shifted the risk calculus for businesses considering the country as a destination. Construction activity has picked up alongside tourism, with the Central Reserve Bank raising its own 2026 growth forecast range to 4.5% to 5%, citing robust economic activity in the first half of 2026.

The government's approach to Bitcoin has also changed. The operational control of the Chivo wallet has been transferred to a private operator, and no public funds have been used in the accumulation of Bitcoin under the current framework. This shift aligns with the IMF's demand for fiscal prudence from borrowing nations.