This content is from: Local Insights

Nicaragua: Economic prospects 2017

According to the Economy and Growth Prospects 2017 report published by the Central Bank of Nicaragua (BCN), the results of Nicaraguan macroeconomic development remain among the best in the region.

The IMF has warned about global risks that could adversely affect markets, like the refugee crisis in Europe, the severe drought in Africa, and the Middle East war, among other things. Despite these risks, the IMF has noted that Nicaragua's macroeconomic performance remains robust, highlighting its strong economic growth, supported by strong agricultural production, intense trading activity, and low inflation. The growth projections of the Nicaraguan economy continue to be positive and relatively high when compared to the growth rates of the rest of the countries in the region.

Credit rating agencies Moody's and Fitch also validated the country's good economic performance. They cited the moderate level of indebtedness of the central government, its history of pragmatic economic policies and highlighted the government's strategic alliance with the private sector as an important factor for the country's positive economic standing.

As reported by the Fundación Nicaraguense para el Desarrollo Económico y Social (Funides), an independent think tank, the main economic sectors in the country that have the greatest impact on Nicaragua's GDP (manufacturing, commerce, transportation, telecommunications and agriculture) will see a steady increase in 2017 and 2018.

The manufacturing sector in Nicaragua faced difficult conditions in 2015 (with a decrease of 1.1%). However, Funides predicts increased rates of 4.2% and 4.5% in this sector in 2017 and 2018. Additionally, projections show that commerce will also have stable increase rates of 6.5% in 2017 and 2018.

Funides also predicts an increase of 6.5% and 4.8% for the transportation and communications sectors. Finally, according to calculations from the BCN, the country's agriculture sector has recovered from the effects of El Niño since the third quarter of 2015, and for 2018, an increase of 3.6% is expected.

In general, the macroeconomic prospects for 2017 are expected to remain favourable and Nicaragua's economic growth continues to be one of the most dynamic in Latin America. The BCN estimates that inflation in 2017 will be in the range of 5.5 to 6.5% and that the country's economic growth in 2017 will be between 4.5 and 5.0%, mainly as a result of activities in commerce, industry, construction, agriculture and services.

Rodrigo TaboadaAna Carolina Alvarez

© 2021 Euromoney Institutional Investor PLC. For help please see our FAQs.

Instant access to all of our content. Membership Options | 30 Day Trial