In the view of Fitch Ratings, continued political unrest could undermine investment conditions and economic growth, as well as raise the risks of confidence shocks to the financial system and macroeconomic stability.
From a statement issued by from Fitch Ratings:
Fitch Ratings-New York/San Salvador-17 May 2018: Continuing protests and resulting political violence in Nicaragua heighten risks to political stability and governability, says Fitch Ratings. Continued political unrest could undermine investment conditions and economic growth as well as elevate risks of confidence shocks to the financial system and macro stability.
Economic growth in 2017 exceeded expectations, and although the outlook for 2018 is optimistic, the entity points out that there is a need to reduce tax expenditure and rationalize subsidies.
From a statement issued by the IMF:
Economic performance in 2017 was above expectations and the 2018 outlook is favorable. To minimize downside risks, Nicaragua needs to further fortify its policy framework by (i) hastening the implementation of the international taxation law, reducing tax expenditures, rationalizing subsidies, and implementing a comprehensive reform of the Social Security, (ii) enhancing the supervisory perimeter, (iii) reinforcing the AML/CFT framework, and (iv) building financial buffers and further increasing international reserves.
Funides projects that 2017 will close with economic growth of 4.8%, explained mainly by the good performance of exports, which may slowdown in 2018.
From the preface to Funides' Third Economic Situation Report:
FUNIDES projects that the economy will close with a growth of 4.8 percent in 2017. Consumption, after having slowed down during 2016 and much of 2017, now shows signs of some stability, except in the case of consumption of durable goods.There has been a slowdown in investments, while exports of goods and services have shown an acceleration even in the third quarter of the year, and have been a key element in sustaining the current rate of growth.However, there are decreases in exports of harnesses and a slowdown in the textile sector, which is expected to have almost zero growth.Manufacturing continued to be driven by increased activity in certain export products, such as sugar and meat, although less favorable international prices are forecast. The deceleration in the collectionof taxes on added value and on income continued, a trend that had been highlighted in the previous Conjuncture Report.The accumulated deficit of the INSS was less negative as a result of an effort to reduce expenses, in a scenario of increased revenues. Remittances continued to rise, reaching an increase of 10.6 percent in nominal terms in September, well above the recent average. This increase in remittances has been generating a positive effect on consumption in the last months of the year.We are noticing a slowdown in private investment, which could close in figures lower than those of last year.
At the end of the year the Nicaraguan economy could achieve a growth of 4.6%, a tenth less than in 2016, continuing the process of deceleration seen over the last two years.
From a report by Funides:
The Nicaraguan Foundation for Economic and Social Development (FUNIDES) presents its second Economic Situation Report for 2017, showing that economic growth for 2017 will be 4.6 percent, one tenth lower than last year, continuing the process of deceleration seen in the last two years.
The report highlights that the economic slowdown that had been observed in the year seems to have stopped in September and that the pace of overall economic activity exceeds that of other countries in the region.
From a statement issued by the Nicaraguan Foundation for Economic and Social Development (FUNIDES):
FUNIDES notes that during 2014, economic activity, measured by the Monthly Economic Activity Index (IMAE) has been declining, leading to this year closing with less than last year's growth. The IMAE decreased from 4.7% in January to 3.7% in September, the last month for which data is available. But this slowdown seems to have stopped in September. Despite this economic activity is relatively high when compared with other Central American countries.
The report notes that although private consumption remains the main engine, the pace of growth in economic activity continues to slow.
Economic Situation Report of the third quarter of the year, prepared by the Nicaraguan Foundation for Economic Development:
The Nicaraguan Foundation for Economic and Social Development (FUNIDES) presents its third report on economic conditions in 2014, which states that in the first 7 months of 2014, the economy has continued a slowdown which began in the fourth quarter 2013. The average variation of 12 months of the Monthly Index of Economic Activity (MIEA), original series, which had reached 4.8% in April stood at 4.2% in July.
After upgrading the System of National Accounts, reports for the second quarter 2012 indicate an acceleration in economic growth, of 4.2%, compared to the same period of 2011.
Situation Report 2012 II, by the Central Bank of Nicaragua:
In annual terms, the Nicaraguan economy achieved growth of 4.2 percent. This rate represents an acceleration of 2.6 percentage points compared to the growth rate of the first quarter, reaching a cumulative growth of 2.8 percent in the second quarter of 2012 compared with the same period in 2011.
First Economic Situation Report 2012 has been issued by the Nicaraguan Foundation for Social and Economic Development.
Executive summary of the report by FUNIDES:
External Environment
The growth of world economy and in particular in the advanced economies in 2011 was lower than anticipated. The latest estimates from the Economist 1 Intelligence Unit (EIU, December 16, 2011) forecast a global economic growth of 3.8 percent for 2011 and 3.2 percent for 2012. These projections are lower than the 4.5 percent initially estimated by the IMF for 2011-2012.
IMF Board Completes Sixth Review of the Expanded Credit Facility and approves release of $8.9 million
Economic performance in 2010 was satisfactory. Gross Domestic Product (GDP) grew by 4.5 percent, underpinned by a strong performance in consumption and investment; the fiscal performance (especially in tax revenues) was better than expected, and the balance of payments also strengthened.
The extension allows the immediate disbursement of $ 20 million.
The Executive Board of the International Monetary Fund (IMF) today completed the fourth and fifth review of economic developments in Nicaragua under the Credit Facility Extended (SCA) and agreed to extend the agreement until December 4th, 2011.
The extension involves a reprogramming of disbursements as provided in the agreement.
The country and the IMF agreed to extend the three-year financial and economic program signed in October 2007 for two more months.
By signing the letter of intent (which must be ratified by the board of the International Monetary Fund-IMF), the economic program will conclude this next December and not on October 4th, as originally planned.
"The head of the bank said that once the agreement is ratified, the multilateral agency will disburse $36 million to Nicaragua. Nicaragua and the IMF concluded yesterday the second round of negotiations of the fourth and fifth review of the economic program, which both parties signed in October 2007".
The country expects to signs a Letter of Intent related to the technical extension of the IMF's Extended Credit Facility.
Antenor Rosales, President of Nicaragua's Central Bank, added that in this week's negotiations they have discussed two letters of intent.
"The first is related to the fourth and fifth revision of the economic program and its enlargement for 2011, while the other is about a discussed two-month extension, which could be signed today", reported El Nuevo Diario on its website.
The Nicaraguan government is meeting with an IMF mission to hold discussions on a $78 million loan.
The negotiations will be held in the Nicaraguan capital, Managua, and will continue until 17 September.
El Nuevo Diario reports statements from the president of Nicaragua's central bank, Antenor Rosales: "we are determined to achieve general agreement with this mission to enable the existing credit and debt servicing program we have with the IMF to be formally recognized by the fund's directorate by November or early December".
The president of the central bank announced that they will request a year's extension for the program due to expire in October.
Antenor Rosales, Nicaraguan Central Bank president, indicated that the request to the International Monetary Fund (IMF) is to continue the program, which was signed in 2007, until 2011 (election year).
In a press conference, Rosales added that it makes sense that it should be the new government that discusses the basis for Nicaragua's relationship with the IMF in the coming years, according to Terra's web portal.