Analysis: what lies behind the 4.5% growth forecast, and where the soft spots are

El Salvador's economy is on course for its fastest growth in several years. GDP rose 5.1% year on year in the second quarter of 2026, according to the Central Reserve Bank (BCR), and the IMF projects 4.5% for the full year, after 3.9% in 2025 and 2.6% in 2024, EFE reported after the visit of IMF deputy managing director Dan Katz on 3 November. The monthly activity index (IVAE) rose 4.6% in August, compared with 3.6% a year earlier.

The detail of the IVAE shows where growth comes from. In August, public administration, education and health grew 7.5%, construction 6.8%, real estate 5.4%, information and communications 4.4%, and trade and transport 4.3%, Diario El Mundo reported. Construction, the main driver earlier in the year, has slowed month by month: from 27.5% in January to 13.4% in April, 9.3% in July and 6.8% in August. Agriculture contracted 0.8%, its fifth monthly fall in a row.

Household income from abroad is also growing more slowly. Remittances rose 3.5% in January to September to $7,619.9 million, against 18.5% in the same period of 2025, according to BCR figures reported by El Diario de Hoy. Nearly all of that money is spent on consumption, so slower remittances weigh on retail and services. Annual inflation rose to 3.60% in September from 3.19% in August, El Diario de Hoy reported; the October figure is due this week.

The fiscal side remains the main medium-term constraint. Public debt closed 2025 at 87.6% of GDP and the IMF programme aims to bring it to 80.1% by 2031 through an adjustment of 3.5 points of GDP, Diario El Mundo reported. The state's debt to the pension funds reached $11,874.74 million in September, Qué Pasa Today reported, and the government has committed to a pension reform in June 2027. How that reform is designed will matter for both public finances and long-term savings.

For investors, the picture is of an economy growing faster than its recent average with support from public works, real estate and services, while the drivers that lifted 2025, such as remittances and the first wave of construction, are fading. The next data points to watch are the October inflation figure, third-quarter GDP and the 2027 budget.