Nicaragua Economic Outlook

December 4, 2018

The economic crisis has deepened in the second half of the year, as the ramifications of the political situation ripple through the economy. In September, economic activity retracted for the fifth consecutive month and the formal workforce shrank further. Moreover, instability has dragged on consumer and investor confidence, leading to capital flight and significant bank withdrawals. In response to the deteriorating macroeconomic picture, on 9 November S&P Global Ratings downgraded Nicaragua’s sovereign credit rating to B- with a negative outlook and flagged its weakening fiscal position, depleting international reserves and strained balance of payments as chief concerns. Meanwhile, the U.S. recently imposed financial sanctions on Vice President Rosario Murillo and a top aide for corruption and undermining democracy.

Nicaragua Economic Growth

The ongoing political conflict will continue to derail economic growth into 2019, hampering tourism and investment. Remittance inflows, however, should remain the economy’s lifejacket. FocusEconomics panelists expect GDP to contract 0.2% in 2019, down 0.4 percentage points from last month’s estimate, and to grow 2.6% in 2020.

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	32.35	2.11 %	Dec 12

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