Nicaragua Economic Forecast

Nicaragua Economic Outlook

October 13, 2020

The economy likely shrank sharply in Q2, notwithstanding the lack of a domestic lockdown, due to a collapse in tourism, softer activity abroad and domestic uncertainty generated by the health crisis. Economic activity was down 9.5% year-on-year in April—the latest month of available data—with the hospitality, manufacturing and financial services sectors falling particularly steeply. Moreover, credit to the economy was down significantly in annual terms throughout Q2. A recovery should have taken hold in Q3 amid stronger momentum abroad and an easing of new Covid-19 cases. In politics, the government recently proposed two bills which critics say could be used to silence the opposition in the run-up to next year’s elections. Immediate economic consequences are limited, although the proposals raise political tensions and the risk of international sanctions.

Nicaragua Economic Growth

The economy is seen contracting this year as the Covid-19 pandemic hurts tourism and remittances, while the domestic outbreak hits activity at home even in the absence of a lockdown. The recovery next year will be tepid due to heightened uncertainty. Downside risks stem from a potential resurgence in infections, limited fiscal support and deteriorating international relations. FocusEconomics panelists see GDP contracting 6.4% in 2020, before expanding 1.4% in 2021, which is unchanged from last month’s forecast.

Nicaragua Economy Data

2015 2016 2017 2018 2019
Population (million)6.36.36.46.56.5
GDP per capita (USD)2,0442,1022,1582,0281,915
GDP (USD bn)12.813.313.813.112.5
Economic Growth (GDP, annual variation in %)4.84.64.6-4.0-3.9
Consumption (annual variation in %)5.46.02.6-3.9-2.2
Investment (annual variation in %)27.7-0.31.2-26.4-30.6
Unemployment Rate-  -  -  -  -  
Fiscal Balance (% of GDP)-1.6-2.0-2.0-4.0-  
Money (annual variation in %)19.110.513.0-19.73.2
Inflation Rate (CPI, annual variation in %, eop)3.13.15.73.96.1
Inflation Rate (CPI, annual variation in %)4.03.53.94.95.4
Benchmark Interest Rate (%)12.0311.4410.8510.9012.46
Exchange Rate (vs USD)27.9029.3030.8032.3333.84
Exchange Rate (vs USD, aop)26.5928.2629.7631.5833.00
Current Account (% of GDP)-8.8-6.5-4.90.6-  
Current Account Balance (USD bn)-1.1-0.9-0.70.1-  
Trade Balance (USD billion)-3.5-3.7-3.5-2.7-  
Exports (USD billion)2.42.22.52.5-  
Imports (USD billion)5.95.96.15.2-  
Exports (annual variation in %)-9.3-8.114.5-1.2-  
Imports (annual variation in %)0.5-0.33.5-14.7-  
International Reserves (USD)2.52.42.82.32.4
External Debt (% of GDP)82.182.683.188.7-  

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Nicaragua Facts

Value Change Date
Exchange Rate33.472.11 %Jan 01

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