Nicaragua Economic Forecast

Nicaragua Economic Outlook

February 12, 2019

The Nicaraguan economic crisis remains severe. Despite intensifying international pressure for the government to hold early elections, the Ortega administration instead unveiled a major tax overhaul in late January. The package includes higher income taxes and social security contributions aimed at reviving the government’s depleted coffers. Given pension reforms sparked the socioeconomic crisis that began last April, this latest proposal could stir a resurgence in public unrest and would likely erode firms’ competitiveness, which could, in turn, further exacerbate the hardship faced by Nicaraguans. Meanwhile on 25 January, Moody’s downgraded its outlook on Nicaragua’s B2 credit rating to negative from stable, in response to the country’s shaky balance sheets, debt burden and tight liquidity.

Nicaragua Economic Growth

As the political crisis drags on, the economy will likely be pushed further into recession. Capital flight, diminishing FDI and falling fixed investment are expected to cause GDP to shrink again in 2019. FocusEconomics panelists expect GDP to contract 1.8% in 2019, which is down 1.4 percentage points from last month’s estimate, and to grow 1.2% in 2020.

Nicaragua Economy Data

20132014201520162017
Population (million)5.96.06.16.26.2
GDP per capita (USD)1,8471,9752,0732,1442,221
GDP (USD bn)11.011.912.613.213.8
Economic Growth (GDP, annual variation in %)4.94.84.84.74.9
Consumption (annual variation in %)3.84.25.25.33.8
Investment (annual variation in %)3.5-0.424.03.9-1.4
Unemployment Rate-  -  -  -  -  
Fiscal Balance (% of GDP)-1.1-1.5-1.6-2.0-1.9
Money (annual variation in %)19.613.019.110.513.0
Inflation Rate (CPI, annual variation in %, eop)5.76.53.13.15.7
Inflation Rate (CPI, annual variation in %)7.16.04.03.53.9
Benchmark Interest Rate (%)14.9813.5412.0511.4410.78
Exchange Rate (vs USD)25.3026.6027.9029.3030.80
Exchange Rate (vs USD, aop)24.4725.7226.5928.2629.76
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)2.42.72.42.22.5
Imports (USD billion)5.75.95.95.96.1
Exports (annual variation in %)-11.111.3-9.3-8.114.4
Imports (annual variation in %)-3.43.10.5-0.33.5
International Reserves (USD)2.02.32.52.42.8
External Debt (% of GDP)88.485.483.683.4-  

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Nicaragua Facts

ValueChangeDate
Exchange Rate32.532.11 %Feb 14

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