One Year in Crisis

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.

Wednesday, April 17, 2019

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.

The Central Bank of Nicaragua reports that in December 2018 the Monthly Index of Economic Activity registered a 7% decrease with respect to the same month in 2017, being the activity of Hotels and Restaurants the most affected.

See "Nicaraguan Economic Activity Drops 7%"

In relation to the loss of formal jobs in the country, NCB statistics detail that following the decreases reported last year, in February 2019 the affiliation of 755,908 workers to social security was registered, 17% less than in the same month of 2018.

Also see "Nicaragua: Formal Employment Keeps Falling"

In this time of crisis, at the end of February of this year the National Assembly approved a tax reform that raises the income tax of large taxpayers from 1% to 3%.

This tax reform occurred in one of the worst moments of the Nicaraguan economy, as it is estimated that during 2018 production contracted by about 4%, and by 2019 the Gross Domestic Product is expected to report a fall of between 7% and 11%.

More on this topic

Nicaragua: Formal Employment Keeps Falling

April 2019

In accordance with the decreases reported last year, in February 2019 there were 755,908 social security workers, 17% less than in the same month of 2018.

The reduction in the number of workers registered with the Nicaraguan Institute of Social Security (INSS) is caused by the behavior of the employment level in the activities of commerce, construction, finance and transport, storage and communications, reported the Central Bank of Nicaragua (BCN).

Employment: Easier to Destroy Than to Create

August 2018

From January 2016 to December 2017, 88,932 new workers signed up to the social security scheme in Nicaragua, but since the crisis began in April, more than 86,000 formal jobs have been lost.

The number of formal jobs that the Nicaraguan economy took two years to generate, disappeared in the first three months of the political and social crisis that began on April 18.  

Nicaragua: Decline in Formal Employment Gets Steeper

August 2018

In line with the year-on-year falls of 2%, 4% and 7% reported in March, April and May, in June 810,430 workers were registered as enrolled in the social security scheme, 12% less than was reported in the same month in 2017.

In relation to the performance of the sectors, the Central Bank of Nicaragua (BCN) reported that in year-on-year terms, most of the activities registered decreases, except for the manufacturing industry activities, and electricity, gas and water, which recorded increases of 1.4% and 0.2%, respectively.

Nicaragua: Formal Employment Continues to Fall

June 2018

In addition to the fall of 2% reported in March, the affiliation of 878,500 social security workers was recorded in April, 4% less than the number reported in the same month in 2017.

The Central Bank of Nicaragua (BCN) reported that according to the administrative records of the INSS, they indicate that between the months of April 2017 and 2018, the number of insured persons decreased from 914,276 to 896,869 workers, which is equivalent to a fall of 3.9%.

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