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Nicaragua Economic Forecast

Nicaragua Economic Outlook

GDP growth slowed in Q3 last year as an acceleration in private consumption was more than offset by slower expansions in public spending and exports, and a stronger contraction in fixed investment. In Q4, despite tighter financial conditions, economic activity accelerated due to improvements in the agriculture, mining, construction and energy sectors. Turning to Q1 this year, early signs are upbeat. Inflation moderated in January, while remittances grew 63% annually, boding well for private spending. In other news, in late February, the government hiked the minimum wage by 10%, likely aiding personal consumption. That said, in early March, it also shuttered the country’s largest business association, boding poorly for investment. Moreover, relations with the West, Brazil and Colombia have worsened over the past month amid criticisms of the government’s crackdown on dissidents.

Nicaragua Inflation

Inflation decelerated to 10.9% in January (December: 11.6%). Meanwhile, the policy rate set by the Central Bank has stood at 7.00% since December. Inflation will decelerate this year as commodity prices moderate and global supply chain disruptions ease. However, local supply difficulties and second-round effects remain upside risks.

Nicaragua Economic Data

2017 2018 2019 2020 2021
Population (million) 6.4 6.5 6.6 6.5 6.5
GDP (USD bn) 13.8 13.0 12.7 12.7 14.2
GDP per capita (USD) 2 2 1 1 2
GDP (NIO bn) 414 411 421 435 498
Economic Growth (Nominal GDP, ann. var. %) 8.9 -0.8 2.3 3.5 14.3
Economic Growth (GDP, ann. var. %) 4.6 -3.4 -2.9 -1.8 10.3
Private Consumption (ann. var. %) 2.7 -4.6 -1.8 -0.4 8.7
Government Consumption (ann. var. %) 1.6 -2.3 1.4 2.4 9.3
Fixed Investment (ann. var. %) 2.1 -22.0 -27.5 11.1 34.3
Exports (G&S, ann. var. %) 10.1 -1.6 6.1 -9.0 18.1
Imports (G&S, ann. var. %) 3.3 -15.1 -3.8 0.1 21.1
Unemployment (% of active population, aop) 3.7 5.4 5.6 5.0 4.5
Fiscal Balance (% of GDP) -2.0 -4.0 -1.7 -2.6 -1.6
Public Debt (% of GDP) 48.2 54.4 57.6 65.4 65.9
Money (ann. var. of M2 %) 13.0 -19.7 3.2 16.1 11.9
Inflation (CPI, ann. var. %, eop) 5.7 3.9 6.1 2.9 7.2
Inflation (CPI, ann. var. %, aop) 3.9 4.9 5.4 3.7 4.9
Average Lending Rate (%, aop) 10.78 10.90 12.46 11.18 9.62
Exchange Rate (NIO per USD, eop) 30.8 32.3 33.8 34.8 35.4
Exchange Rate (NIO per USD, aop) 30.1 31.6 33.1 34.3 35.1
Current Account Balance (USD bn) -1.0 -0.2 0.8 0.5 -0.4
Current Account Balance (% of GDP) -7.2 -1.8 5.9 3.6 -3.1
Merchandise Trade Balance (USD bn) -2.4 -1.6 -1.1 -0.9 -1.9
Merchandise Exports (USD bn) 4.2 4.2 4.3 4.4 5.6
Merchandise Imports (USD bn) 6.5 5.8 5.4 5.3 7.5
Merchandise Exports (ann. var. %) 10.1 0.4 3.4 1.3 26.8
Merchandise Imports (ann. var. %) 4.1 -11.4 -7.0 -1.4 40.0
Foreign Direct Investment (USD bn) 1.04 0.84 0.50 0.75 1.22
International Reserves (USD bn) 2.8 2.3 2.4 3.2 4.0
International Reserves (months of imports) 5.1 4.7 5.3 7.2 6.5
External Debt (USD bn) 12.7 13.0 13.2 13.6 14.4
External Debt (% of GDP) 92.2 99.8 103.9 107.2 101.3

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