By
Godfrey Benjamin
May 10th, 2024
Having adopted Bitcoin alongside the United States dollar as the legal tender two years ago, El Salvador has attracted significant capital investment through tourism and immigration compared to its neighbors.
Amid the global economic shift caused by the fast growth of the BRICS alliance, the Middle East crisis, and the Russia vs Ukraine war, El Salvador has been named an economic powerhouse for the Central American region since its move to adopt Bitcoin (BTC) alongside the United States dollar as the legal tender. The Spanish country with a population of about 6.5 million and currently led by President Nayib Bukele, has significantly transformed its economic outlook through the adoption of Bitcoin which has an annual inflation of about 1.8 percent and is expected to further lower through halving events. Moreover, El Salvador does not involve itself with direct printing of money like many other countries grappling with high inflation, instead, it participates in the Bitcoin mining sector through its natural resources.
El Salvador Economic Outlook
According to Gabor Gurbacs, the strategy adviser at investment management firm VanEck, fund managers do not have the luxury of assuming El Salvador as the country has the potential to become the Singapore of the Americas. Notably, Singapore has become a strategic economic hub for the Southeast Asian market and its economy surpassed its peers in terms of Gross Domestic Product (GDP). Moreover, Singapore has managed to attract significant foreign investment, especially in the web3 sector due to its clear crypto regulations. Similarly, El Salvador’s government has managed to create a favorable investing environment through its Bitcoin plan.
After detailed analysis, the VanEck strategy adviser is optimistic that El Salvador will continue to register increased immigration, heightened capital investment from the international community, and overall growth in the coming years. Gurbacs was replying to comments by Max Keiser, a Bitcoin maximalist who now lives in El Salvador. Notably, Keiser highlighted that El Salvador has become even safer than most cities in the United States that are experiencing fentanyl crisis, mass shootings, and lootings, and still have great beaches, coffee, and weather.
El Salvador’s Bitcoin plan has attracted Wall Street’s attention amid the mediocre performance of the US treasury bonds and the stock market indexes. Moreover, Bitcoin price has rallied more than 100 percent YTD compared to about 5 percent recorded by the S&P 500 index. The government of El Salvador not only relies on Bitcoin mining to acquire new coins but also offers BTC bonds to institutional investors seeking to tap into the emerging web3 industry.
The FIAT guys at @jpmorgan say El Salvador is finally “getting some credit”.
They are just catching up.
It will soon be: “Salvadoran bonds are now Investment Grade”.
You’ll see 😉 pic.twitter.com/6Z1r7iS9M4
— Nayib Bukele (@nayibbukele) May 9, 2023
Earlier this year, Bukele highlighted that the country will be purchasing 1 Bitcoin per day. The move has significantly bolstered the Bitcoin market during the past few months.