Safety in El Salvador

For years, El Salvador’s international image was dominated by gang violence, insecurity, and the economic costs associated with it. Today, that narrative is changing.

A dramatic improvement in public security is helping reshape perceptions of the country, while economic growth and new foreign investment are creating a more positive environment for business. Particularly noteworthy is the growing interest from European companies. The German-Salvadoran Chamber of Commerce and Industry reports receiving inquiries from companies in Germany, Austria, Belgium, and other European countries seeking information about investment opportunities in El Salvador.

The security transformation of El Salvador raises an important question: Can the country convert its security gains into a sustainable economic growth model?

Security Is Becoming an Economic Competitive Advantage

The government’s security strategy, launched in March 2022 with the implementation of a state of exception to combat criminal organizations, has dramatically reduced reported homicides compared with the country’s most violent years.

For the government, the benefits extend far beyond public safety. A safer environment can reduce the risks and costs businesses face when operating in a country, while making tourism, retail, logistics, and manufacturing more attractive.

Vice President Félix Ulloa has described the recovery of security as a central component of the government’s economic strategy. An estimate produced in connection with a bilateral agreement between El Salvador and the United States suggested that gang activity had generated an economic loss equivalent to approximately 10.5% of GDP.

That figure illustrates why security matters to investors. For a manufacturer, for example, lower crime can affect everything from employee mobility and transportation to insurance, logistics, supply-chain reliability, and the ability to operate facilities without disruption.

In that sense, improved security is not simply a social achievement. It can become an important competitive advantage for foreign direct investment (FDI). The security transformation of El Salvador is therefore increasingly becoming part of the country’s economic value proposition.

Economic Indicators Point to a Broader Recovery

The improvement in security is occurring alongside stronger economic performance.

According to figures cited by the German-Salvadoran Chamber of Commerce and Industry, El Salvador’s economy expanded 3.9% in 2025, followed by 4.8% growth in the first quarter of 2026.

Investment indicators are also encouraging:

• Private investment increased 23% in 2025.
• Public investment increased 22%.
• 17 of 19 economic sectors expanded during the first quarter of 2026.

These numbers suggest that the country’s recovery is becoming broader than simply a decline in crime.

For foreign investors, however, the key issue will be whether this momentum can be sustained. Long-term investment decisions are based not only on current growth rates but also on expectations regarding productivity, labor availability, infrastructure, market access, operating costs, and regulatory stability.

European Companies Are Starting to Take Notice

Perhaps one of the clearest signs that El Salvador’s investment narrative is changing is the growing attention from European businesses.

The German-Salvadoran Chamber of Commerce and Industry says it is receiving inquiries from companies in Germany, Austria, Belgium, and elsewhere in Europe interested in understanding the conditions for establishing operations in El Salvador.

That shift is significant.

There is an important difference between international companies reading about a country’s economic transformation and actually contacting local business organizations to explore investment opportunities. The latter indicates that companies are beginning to evaluate El Salvador as a potential location rather than simply monitoring it from a distance.

One of the most visible examples is ZF Lifetec, the German automotive supplier that recently inaugurated a manufacturing plant in El Salvador producing automotive safety systems.

The project is particularly relevant because it demonstrates the potential for El Salvador to attract higher-value manufacturing, rather than relying primarily on traditional sectors.

ZF Lifetec Could Be a Sign of Things to Come

The arrival of an automotive supplier provides a potentially important signal for other manufacturers evaluating Central America.

El Salvador offers several characteristics that could support manufacturing investment:

• Improved public security
• Proximity to the United States
• Access to Central American markets
• Existing trade relationships
• An established manufacturing and export base
• Potential opportunities associated with nearshoring

The global restructuring of supply chains is also creating opportunities for smaller countries that can offer proximity, reliability, and competitive operating environments.

If El Salvador can continue improving its business ecosystem, the presence of companies such as ZF Lifetec could help create supplier networks and encourage additional investment in automotive components, electronics, logistics, packaging, and other industrial activities.

The objective should therefore be larger than attracting individual factories. The opportunity is to develop industrial clusters capable of generating skilled employment, technology transfer, exports, and local supplier development.

Infrastructure Is Part of the New Investment Narrative

Security is only one component of the country’s changing image.

The reopening of the renovated Hospital Nacional Rosales and the transformation of public spaces in San Salvador are also part of the government’s effort to project an image of modernization.

The new hospital represented an investment of approximately $61 million and was presented by President Nayib Bukele as a facility offering free medical services to patients.

For investors, such projects can matter because investment decisions increasingly encompass the broader operating environment. Companies consider not only factory locations and labor costs, but also transportation, healthcare, urban infrastructure, quality of life, and the ability to attract and retain employees.

The broader security transformation of El Salvador can strengthen these modernization efforts by creating an environment in which businesses and employees feel more confident operating and investing.

The Other Side of El Salvador’s Transformation

Yet the country’s transformation has a second side.

Organizations including Amnesty International and Human Rights Watch have raised serious concerns about the state of exception, including allegations of arbitrary detention, due-process violations, and the imprisonment of people who, according to relatives and rights organizations, may have no connections to criminal organizations.

Concerns have also been expressed regarding restrictions affecting civil-society organizations and allegations involving journalists and human-rights defenders critical of the government.

These issues cannot simply be separated from the investment discussion.

For multinational companies, rule of law, institutional strength, judicial predictability, and regulatory transparency are important components of country risk. A safer business environment can attract investment, but investors also need confidence that contracts will be respected, regulations will remain predictable, and disputes can be resolved through credible institutions.

Can Security Become Sustainable Economic Growth?

El Salvador therefore faces a critical challenge.

The country has demonstrated that a dramatic improvement in security can change international perceptions remarkably quickly. The emerging interest from European companies suggests that this change is beginning to influence investment decisions.

But security is a foundation—not the entire investment strategy.

To transform the current recovery into sustainable growth, El Salvador will need to continue developing:

• Strong institutions and rule of law
• Regulatory predictability
• Skilled human capital
• Modern infrastructure
• Competitive industrial costs
• Reliable logistics
• Export-oriented manufacturing capabilities
• Greater investor confidence

The country’s emerging investment story is compelling: a nation once defined internationally by insecurity is now attracting attention for its improved security, economic growth, modernization, and manufacturing potential.

The unresolved question is whether El Salvador can institutionalize those gains.

For European investors, the growing number of inquiries from Germany and other markets suggests that perceptions are already changing. If the country can combine its security transformation with stronger institutions, productive investment, and high-quality employment, El Salvador could establish itself as an increasingly important nearshoring and manufacturing destination in Central America.

The real economic miracle, ultimately, will not be measured simply by how quickly crime fell. It will be measured by whether the security transformation of El Salvador produces lasting investment, higher productivity, better jobs, and sustainable prosperity.