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El Salvador’s Industrial Production Index (IPI) grew by 3.2% in july 2026 compared to the same month in 2025, reflecting favorable performance in industrial activities, the Banco Central de Reserva (BCR) reported. This result was driven primarily by growth in electricity generation, the manufacturing industry, and services related to water supply and waste management.
Electricity-related activity recorded 7.5% growth, bolstered by high temperatures and low rainfall during july. These conditions increased the use of air conditioning and refrigeration systems in homes, businesses, and industries, pushing energy demand to historically high levels and necessitating greater domestic electricity generation.
Electricity generation trends were also marked by a sharp drop in hydroelectric production, which fell by 72.6% due to limited water availability in reservoirs. Consequently, the share of thermal generation and energy imports increased. Liquefied natural gas remained the primary generation source, while solar photovoltaic energy grew by 35.1%, driven by the addition of new installed capacity.
Meanwhile, activities related to water supply, wastewater disposal, waste management, and remediation grew by 5.0%. The BCR attributed this performance to projects carried out by the Administración Nacional de Acueductos y Alcantarillados (ANDA) to expand coverage, reduce losses, and improve efficiency in potable water distribution.
These efforts resulted in a 14.3% increase in the volume of billed water and a 2.2% reduction in non-revenue water. Additionally, potable water production rose by 3.5%—despite limited rainfall—thanks to more efficient management of groundwater sources and other supply systems.
Meanwhile, the manufacturing industry grew by 2.3%, supported by the performance of sectors such as food and beverages, *maquila* (export assembly), non-metallic mineral products, chemicals, pharmaceuticals, and plastics, among others. Demand for inputs for infrastructure and building projects also boosted the production of construction-related materials.
Within the manufacturing sector, the food and beverage group stood out, growing 4.7% in monetary terms, driven by meat processing; the manufacture of beverages, oils, and fats; dairy products; and milling and bakery products. The maquila sector recorded 7.2% growth in monetary terms, primarily due to the manufacture of electrical semiconductors destined for export.
Mining and quarrying was the only sector to contract, falling by 3.5%. This was mainly linked to increased cement imports—which reduced local extraction of the limestone used in its manufacture—and a lack of salt production during the rainy season. The result was also influenced by a statistical effect, given that the sector grew by 17.9% in july of the previous year.
The BCR clarified that this decline in mining and quarrying does not directly reflect a slowdown in construction activity, which continued to show a high level of dynamism. This performance was supported by strategic public and private infrastructure projects, including the expansion of the Los Chorros Highway, the construction of the Metrocable, and various educational, residential, and commercial projects.
Overall, the Industrial Production Index (IPI) results through July show that industrial activity maintains a positive trajectory, supported by manufacturing growth, higher energy demand, and progress in potable water provision. Added to this is the dynamism of the construction sector, which continues to generate demand for industrial inputs, while domestic demand and certain foreign markets boost manufacturing output.
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