El Salvador faces slow growth and job cuts despite Bukele’s security gains

El Salvador is facing worries over slow growth, layoffs and the cost of living despite major security gains under President Nayib Bukele's anti-gang crackdown.

Bukele remains highly popular for a campaign that the source says cut the homicide rate to 1.3 per 100,000 inhabitants in a country once considered one of the world's most violent. But the improved security has not removed concern over the economy.

Psychologist Lilian Hernandez, 59, was among thousands of government employees who lost their jobs after an International Monetary Fund-backed austerity reform that El Salvador's government co-signed in 2024 to receive up to $1.4 billion in financing. Economists estimate about 15,000 state employees have been laid off since 2024, while labor unions say 47,000 jobs have been lost since Bukele took power in 2019.

The measures were meant in part to reduce debt equal to 90 percent of gross domestic product. Annual inflation rose to 2.76 percent in June, while average monthly grocery costs rose to $260, according to the source item.

A recent Central American University study found seven in 10 Salvadorans saw security as the country's most positive improvement, but the same share said the economy was the biggest problem. Public transport driver Miguel Hernandez said security had improved but economic conditions had worsened.

The source says El Salvador has the slowest growth rates in Central America. Financial group Cibest said this year that growth could fall from 3.9 percent in 2025 to 2.9 percent, largely because of a drop in real estate demand.

Bukele has looked to construction and tourism, which the source says grew 24 percent and 10 percent in 2025. Tourism Minister Morena Valdez said the goal was to create a "virtuous circle" from improved security and said she expected tourism growth of 14 percent this year.

Former Central Reserve Bank president Carlos Acevedo said the security improvement was not enough to offset insufficient foreign investment. Foreign investment was $764 million in 2025, the lowest in the region, according to Cepal.

Bukele, 45, is expected to seek a third election in February 2027. Economist Cesar Villalona said one possibility is that Bukele will carry out a major fiscal adjustment after reelection to further reduce the deficit.

The source also notes widespread reports of systematic human rights abuses, including torture and sexual violence, in Bukele's prisons.