weighted score 3.4 · five dimensions
Geopolitical & Concentration Risk
El Salvador
Geopolitical conflict, supplier concentration, climate exposure, sanctions risk and policy continuity intelligence for El Salvador-origin supply chains.
Geopolitical conflict
3
No active territorial disputes or armed conflicts. Regional stability generally maintained. Low direct geopolitical conflict exposure for supply chain buyers.
Supplier concentration
2
Minor global supplier. No critical supply chain dependencies. Textile and coffee exports easily substitutable from alternative Central American or global sources.
Climate & physical risk
5
High vulnerability to earthquakes, volcanic activity, and tropical storms. Pacific Ring of Fire location. Water stress increasing. Climate adaptation capacity limited.
Sanctions exposure
1
No comprehensive sanctions. Limited targeted sanctions on individuals. Bitcoin legal tender rollback under IMF deal reduces policy risk. Dollarised economy.
Policy continuity & property rights
6
Democratic erosion under Bukele. Reduced judicial independence. Foreign Agents Law (May 2025). State of exception since 2022. Policy direction concentrated in presidency.
Geopolitical Exposure
Geopolitical Exposure
- Democratic erosion
- President Bukele has concentrated power since 2019. Constitutional changes enabled consecutive re-election (previously prohibited). Supreme Court justices replaced. State of exception in effect since March 2022 with suspended civil liberties.
- US relations
- Relations with the US have been complex. The Bitcoin legal tender experiment (2021) drew criticism from the IMF and international community. Under the December 2024 IMF deal, mandatory Bitcoin acceptance was removed. US migration policy creates bilateral leverage.
- Regional positioning
- El Salvador is a member of CAFTA-DR. Relations with neighbours are generally stable. The country has pursued independent foreign policy moves including Bitcoin adoption and engagement with China on infrastructure.
- Buyer implication
- Low direct geopolitical conflict risk. Primary concern is democratic backsliding affecting institutional reliability, judicial independence, and long-term policy predictability for foreign investors.
Supply Chain Concentration
Supply Chain Concentration
- Export profile
- El Salvador's exports are concentrated in textiles/apparel (maquiladora sector), coffee, and light manufacturing. The country is not a dominant global supplier in any critical category.
- Concentration risk
- Low global supply chain concentration risk. El Salvador is a minor supplier in global terms. Substitution from other Central American or Caribbean producers is feasible for most product categories.
- US dependency
- Export economy heavily oriented toward the US market via CAFTA-DR. EU trade volumes are modest. Any disruption to US market access would significantly impact the economy.
Climate & Physical Risk
Climate & Physical Risk
- Volcanic & seismic
- El Salvador sits on the Pacific Ring of Fire. Active volcanoes and earthquake risk. The 2001 earthquakes caused significant damage and economic disruption.
- Hurricane exposure
- Pacific coast exposure to tropical storms. Hurricane Eta and Iota (2020) caused flooding and landslides. Climate change is increasing storm intensity in the region.
- Water stress
- Water scarcity is a growing concern. Deforestation and urbanisation have reduced watershed capacity. Coffee-growing regions face changing rainfall patterns.
- Germanwatch CRI
- El Salvador ranks among the countries most affected by extreme weather events historically, reflecting high vulnerability relative to economic capacity.
Sanctions & Policy Continuity
Sanctions & Policy Continuity
- Sanctions status
- No comprehensive international sanctions on El Salvador. US has imposed targeted sanctions on individual officials under the Global Magnitsky Act for corruption.
- Bitcoin experiment
- Bitcoin was made legal tender in September 2021. The Chivo wallet and government Bitcoin purchases drew IMF criticism. Under the December 2024 IMF agreement, mandatory Bitcoin acceptance was removed and public sector Bitcoin activity restricted.
- Foreign Agents Law
- The Foreign Agents Law enacted in May 2025 imposes a 40% tax on foreign donations to NGOs and civil society organisations. This may affect international monitoring and transparency initiatives.
- Policy continuity
- Bukele's concentration of power reduces institutional checks. Policy direction is highly dependent on presidential decisions. Dollarised economy (USD) provides monetary policy stability but removes independent monetary policy tools.