Nicaragua Economic Outlook
GDP growth accelerated in year-on-year terms in Q2, thanks to upturns in private spending and fixed investment. In Q3, the economy seemingly strengthened further. Economic activity growth accelerated in July–August relative to Q2 on the back of a broad-based improvement: Output in the agriculture, mining, construction, manufacturing and communication sectors expanded at faster clips. Meanwhile, external sector data sent mixed signals. Merchandise exports rebounded in July–August relative to Q2’s average. However, remittances growth softened in the same two-month period. In other news, in October, the government presented the 2024 budget to Parliament. The budget envisages a fiscal surplus of 0.9% and focuses on poverty alleviation and public investment.
Inflation declined to 7.2% in September from 7.5% in August. The deceleration was driven by softer price pressures for food and textile products. Inflation will average lower in 2024 relative to this year, thanks to a base effect and softer demand. However, it will remain elevated due to the government’s fuel policy and inefficient local distribution networks.