Nicaragua Economic Outlook

July 10, 2018

The economy is being hit hard by ongoing unrest, which is now entering its third month and appears to be having a severe impact on tourism, FDI and domestic activity. Dialogue between President Ortega and civil society has so far proved fruitless, and the death toll continues to rise. Economic activity growth in April slowed sharply to 1.6%, on marked contractions in the construction and hospitality sectors, while employment in the formal sector dropped substantially in same month. Furthermore, bank deposits have slipped by over 10% since the crisis began, leading the Central Bank to recently receive USD 50 million from the Central American Bank for Economic Integration to support liquidity.

Nicaragua Economic Growth

Political and social instability will weigh markedly on growth this year. Our panelists expect GDP to grow 2.7% in 2018, down 1.1 percentage points from last month’s forecast, and 4.4% in 2019. Further downward revisions to growth forecasts are likely in the coming months as panelists evaluate the extent of the economic disruption.

Nicaragua Economy Data

	2013	2014	2015	2016	2017
Population (million)	5.9	6.0	6.1	6.2	6.2
GDP per capita (USD)	1,847	1,975	2,073	2,144	2,221
GDP (USD bn)	11.0	11.9	12.6	13.2	13.8
Economic Growth (GDP, annual variation in %)	4.9	4.8	4.8	4.7	4.9
Consumption (annual variation in %)	3.8	4.2	5.2	5.3	3.8
Investment (annual variation in %)	3.5	-0.4	24.0	3.9	-1.4
Unemployment Rate	5.3	5.6	6.0	6.2	-
Fiscal Balance (% of GDP)	-1.1	-1.5	-1.6	-2.0	-1.9
Money (annual variation in %)	19.6	13.0	19.1	10.5	13.0
Inflation Rate (CPI, annual variation in %, eop)	5.7	6.5	3.1	3.1	5.7
Inflation Rate (CPI, annual variation in %)	7.1	6.0	4.0	3.5	3.9
Benchmark Interest Rate (%)	14.98	13.54	12.05	11.44	10.78
Exchange Rate (vs USD)	25.30	26.60	27.90	29.30	30.80
Exchange Rate (vs USD, aop)	24.47	25.72	26.59	28.26	29.76
Current Account (% of GDP)	-10.9	-7.1	-9.1	-7.5	-5.0
Current Account Balance (USD bn)	-1.2	-0.8	-1.1	-1.0	-0.7
Trade Balance (USD billion)	-3.3	-3.2	-3.5	-3.7	-3.6
Exports (USD billion)	2.4	2.7	2.4	2.2	2.5
Imports (USD billion)	5.7	5.9	5.9	5.9	6.1
Exports (annual variation in %)	-11.1	11.3	-9.3	-8.1	14.4
Imports (annual variation in %)	-3.4	3.1	0.5	-0.3	3.5
International Reserves (USD)	2.0	2.3	2.5	2.4	2.8
External Debt (% of GDP)	88.4	85.4	83.6	83.4	-

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Nicaragua Facts

	Value	Change	Date
Exchange Rate	31.77	2.11 %	Jul 17

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