- El Salvador forecasts 3-4% economic growth in 2024, driven by public and private investments and export demand.
- Bitcoin’s integration into the economy is a fundamental element of President Bukele’s growth strategy.
El Salvador’s Central Bank (BCR) has projected an economic growth rate between 3% and 4% for 2024, largely fueled by public and private investments, and an increase in export demand. This forecast was disclosed by Douglas RodrÃguez, the President of the BCR, who shared some economic data on June 27th.
Economic Growth Driven by Investments and Exports
According to RodrÃguez, El Salvador saw a growth of 2.6% in the first quarter of 2024, edging close to the 3% growth achieved over the entire previous year. The official anticipates inflation to range between 0.5% and 1%, influenced by international oil prices and the diversification of El Salvador’s energy mix with renewable sources.
RodrÃguez emphasized that the country is experiencing significant growth, surpassing the economic progress of the past three decades.
The Silent Influence of Bitcoin
In the backdrop of this economic surge, Bitcoin plays a crucial yet understated role. While RodrÃguez did not explicitly credit Bitcoin for the growth, its influence is interwoven into various aspects of the country’s economic dynamics.
Nayib Bukele’s administration has centered its second term on economic enhancement, leveraging several tools, including Bitcoin, to achieve its goals. Salvadoran Vice President Félix Ulloa highlighted that Bitcoin is one of the many tools at their disposal to drive economic growth.
The nation’s improved security, international events, and policies attracting private investments and tourism are pivotal, with Bitcoin significantly involved in these activities. This is evident from El Salvador’s status as the fastest-growing tourist destination in the Western Hemisphere, as reported by the World Tourism Organization.
Bitcoin Mining and Economic Benefits
Bitcoin mining emerges as a notable activity propelling growth. Pierre Rochard, Vice President of Research at Riot Platforms, underscored the benefits of Bitcoin mining for the energy sector. By establishing mining facilities, these companies help lower electricity prices, which is advantageous for both industrial and residential consumers.
A prime example is Volcano Energy, which plans to start mining in 2025 using its solar and wind power plants, initially generating 130 megawatts (MW) for Bitcoin operations. This not only contributes to the local grid but also bolsters economic growth through affordable energy.
These developments reflect the integral role Bitcoin continues to play in El Salvador’s growth strategy, despite challenges and mixed public acceptance. President Bukele’s commitment to maintaining Bitcoin as legal tender remains firm, even amidst international pressures and critiques.