Nicaragua: Economic Outline
Nicaragua, a small, open economy, relies on light manufacturing, services, and agriculture as its key drivers. The country has greatly profited from foreign direct investment (FDI) and substantial remittances. Between 2010 and 2017, GDP growth averaged 5.1%, propelled by robust private domestic demand and export performance. According to the World Bank, in 2023, the economy exhibited strong performance, with growth estimated at 4.3%. This expansion was propelled by sectors including electricity, mining, trade, construction, finance, transport, and communications, surpassing expectations. In 2024, GDP growth is forecasted to slow down, stabilizing at approximately 3.5% in the medium term. This expected deceleration is due to reduced investment as projects financed by multilateral organizations reach completion and private investors adopt a cautious stance. A moderation in remittances, exports, and FDI inflows is expected to decrease the external surplus, although it will still contribute to the accumulation of international reserves.
Recent fiscal policy has been prudently managed, marked by a slight increase in revenues and controlled public spending, resulting in a 0.7% fiscal deficit and 0.7% primary surplus in 2023. By year-end, 95.7% of the Public Investment Program had been executed, and public debt stood at 59.9% of GDP, marginally lower than the previous year. The 2024 budget adheres to the medium-term budget framework, focusing on fiscal prudence goals to decrease public debt and enhance fiscal sustainability. Fiscal consolidation in the medium term is expected to rely on cuts in public investment, potentially impacting growth, as significant adjustments in current spending require deeper reforms. Tight monetary policy, a managed exchange rate, and declining global prices have contributed to reducing inflation from 11.6% in December of the previous year to 5.6% year-over-year in December 2023. The Central Bank of Nicaragua (CBN) maintained the Monetary Policy Rate (MPR) at 7% throughout the year, aligning with the anticipated decreasing trend in international inflation. Domestic inflation is projected to remain within the 4.0–5.0% range in the medium term. The easing of intense inflationary pressures is expected to sustain short-term stability in the Monetary Policy Rate (MPR) and alleviate pressures on purchasing power (data World Bank).
Between 2005 and 2014, the poverty rate, measured at USD3.65 per day, decreased by more than half, dropping from 29% to 14%. This decline is estimated to have continued in subsequent years up to 2018. However, following the shocks from the socio-political unrest in 2018, the pandemic, and two hurricanes, poverty increased to 15% by 2020. In 2023, it was estimated to decline to 12.5% (from 13.1% one year earlier). According to the World Bank, the unemployment rate stood at 4.7% in 2023 as sustained growth, along with lower inflation and increased remittances, resulted in an elevated employment rate of 66.9% in the second half of 2023, nearing pre-pandemic levels. Social issues include high violence rates, high social inequality, extreme poverty, a strong informal economy, civil unrest, police brutality, and lack of freedom of the press - all of which leads to an increasing number of Nicaraguans emigrating to North America.
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 15.67 | 17.41 | 18.83 | 20.27 | 21.82 |
| GDP (Constant Prices, Annual % Change) | 3.8 | 4.7 | 3.5 | 3.5 | 3.5 |
| GDP per Capita (USD) | 2,372 | 2,608 | 2,791 | 2,974 | 3,168 |
| General Government Gross Debt (in % of GDP) | 44.1 | 41.3 | 39.2 | 38.0 | 37.0 |
| Inflation Rate (%) | 10.5 | 8.4 | 5.0 | 4.0 | 4.0 |
| Current Account (billions USD) | -0.24 | 0.79 | 0.58 | 0.39 | 0.27 |
| Current Account (in % of GDP) | -1.6 | 4.5 | 3.1 | 1.9 | 1.3 |
Source: IMF – World Economic Outlook Database - October 2021.
Note: (e) Estimated Data
| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Nicaraguan Cordoba Oro (NIO) - Average Annual Exchange Rate For 1 MUR | 0.81 | 0.87 | 0.93 | 0.93 | 0.87 |
Source: World Bank - Latest available data.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 28.7 | 18.4 | 52.9 |
| Value Added (in % of GDP) | 16.8 | 26.0 | 46.3 |
| Value Added (Annual % Change) | 1.6 | 1.4 | 5.2 |
Source: World Bank - Latest available data.
| Socio-Demographic Indicators | 2024 (e) | 2025 (e) | 2026 (e) |
|---|---|---|---|
| Unemployment Rate (%) | 6.8 | 6.4 | 6.0 |
Source: IMF – World Economic Outlook Database - Latest available data
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Labour Force | 3,007,338 | 3,060,596 | 3,028,201 |
Source: International Labour Organization, ILOSTAT database
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| Total activity rate | 69.26% | 69.40% | 69.53% |
| Men activity rate | 86.01% | 86.50% | 86.94% |
| Women activity rate | 53.27% | 53.06% | 52.86% |
Source: International Labour Organization, ILOSTAT database
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
See the country risk analysis provided by Coface.
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
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Latest Update: May 2024
