The Lowest Cost of Living in the World for Expats: Central America

article from July 19, 2011

by Julie R Butler

The latest information about which cities have the lowest costs of living for expats has come out, but many of those cities are not attractive destinations for retirees or people looking to build new lives. I would like to address those cities that might be of interest to people who are looking for not only a low cost of living but also a challenge. The expat communities in these locations are not as large and well developed as others that have been popular for some years now.

The cities from the list of the lowest cost places for expats that hold the greatest potential fall into three regions of the world: Central America, South America, and the former Soviet Union. I will begin in Central America.

San Salvador, El Salvador

San Salvador is the cosmopolitan capital of Central America’s smallest and most densely populated nation. From its very beginnings, social inequalities and struggles have defined the country, as the indigenous population of Pipiles and Lucas put up a fierce guerilla resistance to the Spanish Conquest. Such struggles continued on and off, leading up to a brutal twelve-year civil war that came to an end in 1992. After a peace accord was reached, the country has grown economically. However, San Salvador still suffers from a high crime rate and gang violence. Meanwhile, the police force is notoriously corrupt. Despite these factors, Salvadorans have a reputation for being very kind and friendly people.

To get a good idea of what life in San Salvador is like, check out the blog that Jamie included in his list, What’s Up El Salvador. This is up to date and covers many aspects of expat life as experienced by a couple that moved there a few months ago who were involved in the coffee trade. The author, Nanelle, gives the best answer I have seen yet to the question, “What is the cost of living in Central America?” – a question that has no cut-and-dry answer due to different needs and expectations. Nanelle also has some great advice for learning how the pricing structure differs from what you would be used to if you are from North America and how to simplify your life to take advantage of the cost savings that do exist.

Tegucigalpa, Honduras

This city is the sprawling capital of El Salvador’s neighbor, Honduras. It is a dangerous city, where pickpockets, very aggressive beggars, and clever muggers are a constant problem. I am not convinced that this city has anything to offer expats who are shopping around for a place to live other than a low cost of living. What I do know is that Jamie and I have driven through Tegucigalpa five times on our comings and goings in Central America, and we found it to be the most poverty-stricken and saddest city that we ever encountered. Yes, Mexico City has similar sprawl and poverty, but that city is so enormous that there are areas where this isn’t so crushingly evident. Tegucigalpa is in a crowded bowl with slums covering the steep mountainsides all around, so the sense of being trapped inside is inescapable. Most expats who would be living in Tegucigalpa are of the diplomatic, corporate, or NGO type, whereas the more extensive expat communities of Honduras are on the Caribbean islands of Roatán and Utila.

While there was no civil war per se in Honduras during the 1980s, the country was nonetheless a pawn in the Cold War as a staging ground for US covert operations that helped keep the guns and drugs flowing and the entire region destabilized. The Honduran elites maintain close ties with US business interests, and the coup d’état of 2009 that illegally unseated President Manuel Zelaya was the latest frothing over of the continuing Cold War in Central America.

Managua, Nicaragua

According to the list, this is the least expensive city in all of Central America for expats to live in. Again, it is the capital and largest city in its country. Managua is home to the second-largest population in Central America (Guatemala City is the most populous). So it may come as a surprise to find that it is also the most pleasant and user-friendly of the three capital cities being discussed here.

Nicaraguan history follows a similar path to that of neighbors El Salvador and Honduras, emerging as the second poorest country in all of the Americas behind

Haiti. US intervention in Nicaragua has played no small part in the inability of the country to raise itself up out of this situation, with the likes of William Walker, whose goal it was to establish a slave state in Central America, circumventing US law in order to provide mercenary fighters to conflict in Nicaragua that predates the Iran-Contra Affair by 130 years.

I feel it is important to understand the history and the political climate of these countries, because behind the smiling faces that are happy to take your tourism or expat retirement dollars, social problems still simmer and, as in Honduras, the possibility for social and political instability exists. Nicaraguan President Daniel Ortega does belong to the Marxist-Leninist Sandinista National Liberation Front, whom the Contra mercenaries were fighting, and he is allied with Hugo Chávez as well as Gaddafi of Libya and Ahmadinejad of Iran in the name of anti-imperialist opposition to the US.

In addition to Managua, the colonial city of Granada and San Juan del Sur, on the Pacific Coast, and apparently even Esteli, in the mountains of the north, have become popular destinations for expats seeking low cost retirement living.

I highly recommend the blog, Monday (or something), where you will find very detailed cost of living charts for different locations in Nicaragua and Honduras, as well as providing windows into what expat life in these places is like.

see also: The Lowest Cost of Living in the World for Expats: South America

Julie R Butler is a writer, journalist, editor, and author of several books, including Nine Months in Uruguay and No Stranger To Strange Lands (click here for more info). She is a contributor to Speakout at Truthout.org, and her current blog is Connectively Speaking.

email: julierbutler [at] yahoo [dot] com, Twitter: @JulieRButler