El Salvador

Overview

El Salvador is Central America's smallest economy and the only one that uses the US dollar, having adopted it in 2001. With no currency of its own to issue, the country lives off exports, tourism and — above all — remittances sent home by Salvadorans living abroad, which sustain household spending far beyond the capital.

Since 2022 an aggressive security campaign has driven homicide rates from among the world's highest to some of the region's lowest, reopening streets, coastal towns and investment conversations that violence had closed. The government has paired that with a push to attract visitors and manufacturers, and with a controversial embrace of bitcoin — made legal tender in 2021 — that has drawn both curiosity and scepticism from markets.

On the rise

Safer streets, dollar stability and proximity to the US market have put El Salvador back on investors' maps; whether manufacturing, tourism and remittance-driven demand convert into durable jobs will decide how much of that momentum holds.