Companies Struggle Through the Crisis

After 14 months of socio-political crisis in Nicaragua, companies in the country face a reduction in consumption and investment, as well as the impact on national economic activity of rising unemployment.

Friday, June 21, 2019

According to studies conducted by the Consejo Superior de la Empresa Privada (COSEP) and the Nicaraguan Foundation for Economic and Social Development (FUNIDES), the local economy faces a contraction in economic activity that continues to deepen, prevailing uncertainty and distrust in consumers and investors.

See news related to the crisis in Nicaragua.

The latest official data from the Central Bank of Nicaragua (BCN) show that the Monthly Index of Economic Activity (IMAE) in January and February 2019, before taxes, contracted by 5.8 percent compared to the same period last year. Economic activity has been reduced for 10 consecutive months, according to official data, explains the report released up to June 2019.

The document adds that ".... The lower dynamism in economic activity is still influencing the decrease in deposits in the banking system this year (although at a slower rhythm compared to 2018), and therefore the reduction in credit and international reserves."

The study specifies that "... Between January and April 2019 the production and sales of domestic consumer products, i.e. those goods and services that are traded in the local market, continue to be the most affected by the crisis that our country is going through. Specifically, all monitored domestic consumption activities recorded falls in sales between January and April of this year, compared with the same period in 2018.

The most affected domestic consumption activities up to April 2019 have been tourism (tour operators, hotels and restaurants), distribution of medical equipment, leather and footwear, advertising agencies, construction materials and bakery. To a lesser extent, but also showing a negative performance during 2019, are the rest of domestic consumption activities monitored such as small and medium enterprises of textiles and clothing, the distribution of medicines and devices, the distribution of consumer products, the chicken meat industry, the formulation and distribution of agrochemicals, alcoholic beverages and telecommunications."

See press release and results presentation.

More on this topic

Guatemala: Business Confidence Collapses

May 2020

After the Economic Activity Confidence Index reported a 19% drop in March 2020, in April the situation worsened with a -43% year-on-year variation, a drop that agrees with the advance of the health crisis in the country.

In April 2020, the level of the Economic Activity Confidence Index stood at 32.64 points, 43.25% lower than that recorded in March 2020 (57.52 points) and fell by 26.83% compared to April 2019 (44.61 points), reported the Bank of Guatemala.

One Year in Crisis

April 2019

A drastic fall in productive activity, outflows of investments and the disappearance of thousands of formal jobs are some of the consequences a year after the political and economic crisis in Nicaragua.

In March 2018, CentralAmericaData reported the figures that reflected the economic boom that Nicaragua was experiencing: formal employment grew at a year-on-year rate of close to 3%, economic activity each month recorded year-on-year growth rates of between 4% and 5%, while consumption and imports increased. Only a month later, on Friday, April 19, a series of events occurred that determined a radical change in the trend observed until then. The announcement of the reform of the Nicaraguan Social Security Institute triggered a social, political and economic crisis that the country is suffering so far.

Nicaragua: Economy Could Fall by up to 11%

February 2019

If the country does not provide an early solution to the socio-political crisis it has been going through since April 2018, it is projected that the economy could decline between 7% and 11% during 2019.

The Nicaraguan Foundation for Economic and Social Development (Funides), presented the "Informe de Coyuntura" (Situation Report), which explains that if the socio-political crisis continues this year there will be a greater fall in the economy compared to the 4% reported in 2018.

Economic recession caused by the crisis

October 2018

New World Bank projections estimate that because of Nicaragua's political crisis, the country's GDP will fall 4% this year and 1% in 2019.

According to the expectations of the international organization, Nicaragua will be the only economy that will decrease in Central America, because of the political and social crisis in which the country is involved since last April, it is expected that the Gross Domestic Product (GDP) will decrease 3.8% in 2018 compared to 2017.

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