El Salvador Assessment 2026
2.5%
2026 GDP Growth
$5,580
GDP Per Capita
88.1%
Debt-to-GDP
Security Gains, Institutional Tradeoffs
El Salvador is beginning 2026 in a very different place than it did just a few years ago. Public security conditions have improved dramatically, changing daily life and business operations in ways that are visible on the ground. At the same time, political power has become increasingly centralized, reshaping how investors assess long term risk.
What is working
The most obvious change has been security. Lower crime has reduced operational friction for domestic businesses, retail activity, and tourism. Areas previously considered unviable are seeing renewed commercial life, particularly in construction, hospitality, and basic services.
Public investment and state led projects continue to support near term economic activity. Remittances remain a stabilizing force, supporting household consumption and cushioning external shocks.
What remains unresolved
The concentration of political authority and the weakening of institutional checks continue to dominate investor perception. Policy decisions can be decisive, but also abrupt, increasing uncertainty for long duration capital.
Relations with multilateral institutions remain sensitive, which limits access to concessional financing and reduces fiscal flexibility. Capital markets remain shallow, and external confidence is highly dependent on political signaling rather than institutional process.
Assessment
El Salvador in 2026 presents a narrow but real opportunity set. Improved security has unlocked economic activity, but governance and policy predictability remain the primary constraints. The environment favors short horizon projects and domestically focused activity over long term institutional investment.
Sources and references:
International Monetary Fund country reports on El Salvador
World Bank governance indicators
Central Reserve Bank of El Salvador publications
United Nations Office on Drugs and Crime regional security data
