El Salvador's Economy Expands by 4.1% in Second Quarter of 2025, Driven by Construction Boom

Strong Economic Performance in Q2 2025

El Salvador's economy experienced a significant expansion of 4.1% during the second quarter of 2025, according to an announcement made by the Central Reserve Bank (BCR) on September 30, 2025. This growth rate represents the highest quarterly increase for the Central American nation since the fourth quarter of 2023, when the Gross Domestic Product (GDP) grew by 4.69%. The latest figures also show a notable acceleration compared to the 2.3% growth observed in the first quarter of 2025.

Construction Sector Leads the Way

The impressive economic performance was largely propelled by a dynamic construction sector, which recorded an outstanding growth of 33.87% in the second quarter of 2025. This surge in construction activity was supported by both public and private investment projects. Key public works contributing to this boom include the official commencement of the Pacific Airport, the construction of the 'Francisco Morazán' viaduct, the 'Two schools per day' program, the new National Rosales Hospital, and the General Manuel José Arce Bridge. Private sector investments, such as the development of Arela, reportedly the country's tallest apartment tower, also played a role in stimulating the sector.

Broad-Based Growth Across Key Sectors

Beyond construction, several other economic activities contributed positively to the overall growth. Out of 19 economic activities analyzed by the BCR, 12 reported growth. Notable contributors included:

• Financial and insurance activities: 7.56% growth
• Transportation: 7.01% growth
• Accommodation: 6% growth
• Real estate activities: 2.72% growth

The manufacturing industry also showed signs of recovery, registering a 0.22% increase. This is particularly significant as the sector had experienced a prolonged period of contraction for nine consecutive quarters, indicating a positive turnaround.

Investment and Consumption Trends

The BCR's data indicates that the economic expansion was primarily driven by a substantial 28.4% increase in investment. Private consumption also saw a healthy rise of 2.5%, while exports of goods and services grew by 11.5%. Conversely, public consumption experienced a decrease of -2.4% during the same period.

Outlook for 2025

Despite the strong second-quarter results, the Central Reserve Bank maintains its projection for El Salvador's overall economic growth in 2025 to be between 2.5% and 3%. This aligns with or surpasses forecasts from various international organizations, which have provided diverse projections for El Salvador's 2025 GDP growth. For instance, the World Bank has projected growth between 2.2% and 2.7%, the International Monetary Fund (IMF) at 2.47%, the Salvadoran Association of Industrialists (ASI) at 3%, and the Economic Commission for Latin America and the Caribbean (ECLAC) at 2.4%.