Complicated Economic Outlook

In the optimistic scenario, which foresees an end to the crisis in Nicaragua by the end of July, economic growth at the end of 2018 would be only 1.7%, with $400 million losses in added value.

Thursday, June 7, 2018

The Nicaraguan Foundation for Economic and Social Development projects that a possible first scenario would be one where "... the government accepts an early exit negotiated and implemented no later than the end of July, thus achieving a framework of understanding focused on the issues of justice and democratization, putting an end to repression, violence and citizen insecurity."

"... Even in this optimistic scenario, the growth rate of economic activity in 2018 would be significantly reduced to 1.7% compared to 2017 (deceleration), with losses of US $404 million in value added. In labor terms, a loss is estimated for the end of the year of up to 20,000 jobs. "

The report adds that " ... In a second scenario we assume that there is no political will on the part of the Government to seek a negotiated solution to the current crisis, and this is prolonged and intensified for the rest of the year. In this second scenario, the growth rate of economic activity in 2018 would be -2.0% compared to 2017 (contraction), representing a loss of US $916 million in added value. On the employment side, a loss would be felt of up to 150,000 jobs at the end of the year. "

"These considerations are quite optimistic in the sense that it is assumed that the agricultural sector and the financial sector will not be significantly impacted in this context. If these sectors are materially affected, the falls in real GDP growth will be more severe." 

See "Economic Impact of Social Conflicts in Nicaragua 2018". (In Spanish)

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Due to the crisis in the country, the Central Bank has reduced the estimate of economic growth for this year from the range of 4.5% to 5%, to the range of 3% to 3.5%.

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Banco de Guatemala plans to close the year with an estimated 3% growth in GDP, and by 2018 it foresees a rebound in economic activity.

A political crisis that seems to have no end, a decline in foreign investment and a slowdown in local economic activity explain most of the meager growth of 3% that Gross Domestic Product could end up registering this year. 

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