In El Salvador’s Balsamo mountain range, where gang violence once plagued coffee farmers, the atmosphere has transformed. Thanks to President Nayib Bukele’s crackdown on gang activities, violence has subsided, and extortion networks have been dismantled. While this achievement has elevated Bukele to international popularity, the broader economic miracle El Salvador seeks remains elusive.

Despite a 96% drop in homicide rates, a booming real estate market, and a surge in tourism, El Salvador’s economy continues to lag behind regional peers like Guatemala and Nicaragua. The nation, now synonymous with surfing, gourmet coffee, and Bitcoin investments, faces long-standing structural challenges such as poor infrastructure, low education levels, and limited investment.

Security gains but limited economic dividends

Bukele’s government has achieved unprecedented security improvements. Homicide rates have fallen from 53 per 100,000 in 2018 to just 1.9 per 100,000 in 2024, making El Salvador safer than Canada by official statistics. Yet, the anticipated “peace dividend” has yet to materialize in economic growth.

Coffee farmers in regions like Tepecoyo, once terrorized by gang control, can now access their lands safely. However, they still struggle with challenges such as unpaved roads, illiteracy, and lack of financial support. Extreme poverty persists, with many living in makeshift homes and earning less than $200 per month.

Agriculture, particularly coffee production, continues to face hurdles, from storm damage to poor harvest quality. Meanwhile, the country’s primary export sector, textiles and apparel, suffers under fierce competition from Asia.

Bitcoin and infrastructure: A gamble on the future

Bukele’s administration is betting on ambitious infrastructure projects and cryptocurrency to ignite growth. Plans include new airports, port expansions, and mining reforms to exploit gold reserves. El Salvador has also positioned itself as a Bitcoin pioneer, holding over $600 million worth of the digital currency. Recent cryptocurrency market gains have bolstered government assets, yet these speculative ventures remain risky.

The government’s relationship with the United States, particularly under Donald Trump’s leadership, could play a critical role. Trump’s favorable stance on cryptocurrencies aligns with Bukele’s Bitcoin experiment, but stricter U.S. immigration policies could hurt the Salvadoran economy. Remittances from Salvadorans abroad account for over 20% of GDP, leaving the nation vulnerable to policy shifts that could disrupt this lifeline.

A tale of contrasts

In neighborhoods like La Campanera, once controlled by gangs, residents are experiencing newfound freedom and optimism. Real estate prices are rising even in areas previously considered too dangerous. Many Salvadorans living abroad are returning, attracted by safer conditions and affordable property prices.

However, economic growth remains uneven. While tourism rose by 33% in 2023, reaching 3.4 million visitors, and the construction industry experienced its largest boom since the civil war ended in 1992, these gains have not translated into widespread prosperity.

Maria del Carmen Sánchez, who earns $170 per month picking coffee, exemplifies the struggles many still face. With no way to contact her imprisoned son, detained during the anti-gang crackdown, she expresses both hope and despair.

Looking ahead

El Salvador’s economic growth is projected to reach 3% in 2024, slightly above its historical average but still below regional peers. For the country to achieve lasting prosperity, it must address deep-rooted challenges like low productivity, high public debt, and reliance on remittances.

While Bukele’s security policies have transformed lives, the path to economic dynamism requires bold reforms in education, infrastructure, and investment. For now, El Salvador remains a nation on the cusp—its future hanging in the balance between innovative gambles and the enduring weight of systemic issues.


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