Salvadorans revelling in a new-found peace thanks to President Nayib Bukele's "war" on gangs gave him an overwhelming second-term mandate in Sunday's elections. But economic woes mean the honeymoon period may be nearing its end, analysts say.
With high public debt, nearly a third of the population living in poverty and fast-rising consumer prices, Salvadorans just getting used to a life free of fear, are increasingly starting to think of what comes next.
"His second government will be problematic because the expectations of the people will not be met economically or socially," independent Salvadoran economist César Villalona told AFP. "The [economic] trends are not good for him or his regime."
Bukele polls as the most popular president in Latin America, thanks to a gang crackdown that has turned what was once one of the world's most violent countries into a much safer one.
However, "there are still a lot of Salvadorans who are leaving the country," analyst Michael Shifter of the Inter-American Dialogue think tank in Washington told AFP.
"The security situation is better, but the economy is still in rough shape."
'Everything is more expensive'
Bukele on Sunday promised "a period of prosperity" ahead "because there are no longer brakes on starting a business, there are no brakes on studying... to work, there are no brakes on tourism."
But there are beginning to be grumblings on the street.
Regarding "healthcare, education, there is a need for much change," street vendor Blanca Noemi, 52, told AFP in the capital San Salvador.
"Everything is more expensive," said taxi driver Miguel Juárez, 37.
Homemaker Elizet García, 35, added: "We need more employment opportunities for young people."
According to Villalona, slow economic growth and falling agricultural and industrial production bode ill for the future.
The cost of a basic basket of foodstuffs – including bread, beans, meat, eggs and fruit – rose by about 30 percent in three years while the minimum salary increased by only about 20 percent.
Nearly 30 percent of Salvadorans lived in poverty, according to 2022 figures from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
A 2023 US State Department report said about 70 percent of Salvadoran workers were employed in the informal sector without access to government health and pension benefits.
"The country's problems are much broader than the security issue," said Ana María Méndez Dardón, director for Central America at the Washington Office on Latin America, an NGO promoting human rights.
"In terms of access to jobs, access to resources, education and things like that, there has not been any improvement at all," she told AFP.
Corruption 'a challenge'
Fiscal health is another major concern, with public debt at about 80 percent of Gross Domestic Product and the country unable to sell bonds abroad to raise cash, or attract much investment, said Villalona.
Instead, the government has had to borrow from international organisations, its own central bank and the national pension fund, further boosting the deficit.
With less money in circulation, "consumption capacity is dropping. And that doesn't look like it's going to have a short-term solution," said Villalona.
The country is negotiating with the International Monetary Fund (IMF) for a loan of some US$1.3 billion.
But Villalona said Bukele has been loath to meet conditions that include cutting public expenditure and subsidies and raising consumer tax "because it has a political cost."
The US State Department says a state of emergency in place since March 2022 "is contributing to improved consumer confidence and optimism about economic conditions."
However, this has "not yet translated" into significant foreign direct investment, partly because "government accountability has weakened in recent years" and corruption remains "a challenge."
GDP for 2023 is projected to come to 2.8 percent, and the IMF forecasts it will 1.9 percent for 2024.
"The challenge is to grow at higher rates," former central bank governor, now analyst, Carlos Acevedo told AFP.
In a bid to revitalise the dollarised, remittance-reliant economy, Bukele in 2021 made bitcoin legal tender alongside the US dollar, though studies show uptake has been slow.
He invested an undisclosed amount of taxpayer money in the cryptocurrency despite warnings about volatility risks from global institutions including the IMF, which wants bitcoin's tender status repealed.
Acevedo said the second Bukele government must urgently address poverty.
Without social investment, he warned: "the issue of gangs or an equivalent [phenomenon] will re-emerge in the medium term."
by Mariëtte Le Roux & Carlos Mario Marquez, AFP
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