Political Reform to Boost the Economy

Nicaraguan businessmen believe that electoral reform is essential to reactivate the country's economic activity, which has been in decline since the crisis erupted in 2018.

Tuesday, March 3, 2020

According to estimates by the International Monetary Fund (IMF), Nicaragua's Gross Domestic Product contracted by 5.7% in 2019, a drop that complements the year-on-year variation of -3.8% recorded in 2018.

See "Economy: Recovery in sight?"

After the last IMF visit to the country, the international organization explained that since April 2018, social unrest and its aftermath eroded confidence and produced large outflows of capital and bank deposits, which negatively affected Nicaraguan economic activity.

In this context, Carmen Hilleprandt told Laprensa.com.ni that in the short term they do not see a recovery of the 60,000 jobs that have been lost, because "... until there is a national agreement there will not be a recovery, apparently everything is stable, but that stability is relative, there is going to be stability when there is an electoral reform, when there are free and transparent elections, that will be an incentive to continue investing."

Also see "Nicaragua: Minimum Wage Increases 2.6"

Hilleprandt added that "... the partners do not see a recovery of the economy in a short time, but due to the rise in prices caused by the tax reform, business income will not decrease, but there will be a drop in the volume traded."

Regarding the increase in the minimum wage that came into effect on March 1, the businesswoman believes that the workers will not receive the benefits, since due to the increase in production, salaries in the country have lost purchasing power.

More on this topic

Economy: Recovery in sight?

February 2020

After production in Nicaragua fell 3.8% in 2018, the IMF estimates that during 2019 the GDP will contract by 5.7%, however, the agency predicts that by 2020 the variation could be only -1.2%.

Real GDP is estimated to have contracted by another 5.7% in 2019 due to the deterioration in aggregate demand, fiscal consolidation and sanctions, the IMF reported after its visit to the country.

Economy: Slight Improvement in Central America

October 2019

After the economies of the region grew by 2.6% in 2018 as a whole, the IMF estimates that 2019 would close with a rise of 2.7% and could reach 3.4% by 2020.

The document "World Economic Outlook", prepared by the International Monetary Fund (IMF), states that for Panama the projected growth of the Gross Domestic Product (GDP) for 2019 was reduced from 5% to 4.3%.

How to recover from the crisis?

November 2018

Preserving macroeconomic and financial stability and restoring private sector confidence are part of the IMF's recommendations to the Nicaraguan government to mitigate the impact of the political and economic crisis.

A team from the International Monetary Fund (IMF) visited Nicaragua, and after evaluating the situation of the economy after more than six months of social and political crisis, forecasts a 4% contraction of the Gross Domestic Product by 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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