The Pacific coast of Nicaragua was settled as a Spanish colony from Panama in the early 16th century. Independence from Spain was declared in 1821 and the country became an independent republic in 1838. Britain occupied the Caribbean Coast in the first half of the 19th century, but gradually ceded control of the region in subsequent decades. Violent opposition to governmental manipulation and corruption spread to all classes by 1978 and resulted in a short-lived civil war that brought the Marxist Sandinista guerrillas led by Daniel ORTEGA Saavedra to power in 1979. Nicaraguan aid to leftist rebels in El Salvador prompted the US to sponsor anti-Sandinista contra guerrillas through much of the 1980s. After losing free and fair elections in 1990, 1996, and 2001, former Sandinista President Daniel ORTEGA was elected president in 2006, 2011, and most recently in 2016. Municipal, regional, and national-level elections since 2008 have been marred by widespread irregularities. Nicaragua's infrastructure and economy - hard hit by the earlier civil war and by Hurricane Mitch in 1998 - are being rebuilt, but democratic institutions have weakened under the ORTEGA administration as the president has garnered full control over all four branches of government: the presidency, the judicial, the National Assembly, and the Supreme Electoral Council.
Central America, bordering both the Caribbean Sea and the North Pacific Ocean, between Costa Rica and Honduras
gold, silver, copper, tungsten, lead, zinc, timber, fish
Population - distribution
the overwhelming majority of the population resides in the western half of the country, with much of the urban growth centered in the capital city of Managua; coastal areas also show large population clusters
Spanish (official) 95.3%, Miskito 2.2%, Mestizo of the Caribbean coast 2%, other 0.5%
MANAGUA (capital) 956,000 (2015)
- Conventional long form
- Republic of Nicaragua
- Conventional short form
- Local long form
- Republica de Nicaragua
- Local short form
- Geographic coordinates
- 12 08 N, 86 15 W
- Time difference
- UTC-6 (1 hour behind Washington, DC, during Standard Time)
accepts compulsory ICJ jurisdiction with reservations; non-party state to the ICCt
Nicaragua, the poorest country in Central America and the second poorest in the Western Hemisphere, has widespread underemployment and poverty. GDP growth of 4.7% in 2016 was insufficient to make a significant difference. Textiles and agriculture combined account for nearly 50% of Nicaragua's exports. Beef, coffee, and gold are Nicaragua’s top three export commodities.
- External debt stocks
- US$ 10,489,939,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -1,133,400,000
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 7,537,019,916
- Exports of goods and services
- US$ 5,155,590,808
- Total Merchandise Trade
- FDI, net inflows
- US$ 887,800,000
- Commercial Service Exports
- US$ 1,301,000,000
coffee, bananas, sugarcane, rice, corn, tobacco, cotton, sesame, soya, beans, beef, veal, pork, poultry, dairy products, shrimp, lobsters, peanuts
food processing, chemicals, machinery and metal products, knit and woven apparel, petroleum refining and distribution, beverages, footwear, wood, electric wire harness manufacturing, mining
- coffee, beef, gold, sugar, peanuts, shrimp and lobster, tobacco, cigars, automobile wiring harnesses, textiles, apparel
- US 54.1%, Mexico 11%, Venezuela 6.2%, El Salvador 5.5% (2015)
- consumer goods, machinery and equipment, raw materials, petroleum products
- US 18.1%, China 14.4%, Mexico 10.4%, Costa Rica 8.2%, Guatemala 6.9%, Netherlands Antilles 6.1%, El Salvador 5.2% (2015)
- Country Risk Rating
- A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high.
- Business Climate Rating
- The business environment is difficult. Corporate financial information is often unavailable and when available often unreliable. Debt collection is unpredictable. The institutional framework has many troublesome weaknesses. Intercompany transactions run major risks in the difficult environments rated C.
- Mineral (gold) and agricultural (coffee, sugar, meat) resources
- Membership in Central America/United States and Central America/EU free trade zones
- Cautious economic policy
- Stable financial system
- Support from the international community
- Low crime rates compared with other countries in the region
- Vulnerability to natural disasters (cyclones, earthquakes)
- Healthcare and education shortcomings and persistent poverty levels
- Inadequate infrastructure (energy, transport)
- Large current account deficit
- Dependence on international aid, in particular from Venezuela
- Institutional failings: concentration of power within the executive and the Sandinista party, corruption
Since 2013, Nicaragua has recorded a relatively high rate of growth above the average for the countries of Latin America. In 2017, growth is expected to remain resilient, driven mainly by the dynamism of private consumption and the expected increase in agricultural production. Internally, the dynamism of expatriate workers' remittances, maintenance of welfare and the government's flagship "Zero Hunger" program help to increase household purchasing power, particularly for food products. Public investment spending is, on the other hand, likely to slow, in turn affecting construction sector performance for the second consecutive year. With regard to external trade, primary exports are expected to benefit from the rise in agricultural output after the dissipation of the El Nino weather phenomenon. Semi-manufactured products (beef, dairy products) will also benefit from higher productivity and exports of semi-manufactures (especially textiles), from the still preferential access to the American market (main customer). Finally, inflation is expected to rise as a result of the momentum in internal demand.
The budget deficit is expected to remain relatively stable, despite an expected increase in current spending. The 2017 budget includes an increase in civil service wages in the health and education sectors in particular, as well as new civil service recruitment. As in 2016, the government is expected to cut investment spending in order to release addition resources to finance current spending and multiple welfare programs. The deficit and the public debt will remain under control, but access to official multilateral loans, which are highly concessional in nature, is expected to lessen because of the political choices of the Ortega government which, according to international observers, are undermining democracy. In September 2016, the US House of Representatives thus approved a draft law making future loans to Nicaragua conditional on the country's adhering to democratic principles. A final version of the draft is due to be presented to the US Senate during 2017. Nicaragua could, as a result, lose an allocation of almost USD 200 million a year (about 1.5% of GDP) in the form of loans from the World Bank and the Inter-American Development Bank by 2019.
The current account deficit is expected to grow as a result of rising imports in connection with the dynamism of domestic consumption and the increase, though modest, in oil prices. Primary exports are expected to benefit from the increase in agricultural output (coffee, beans, peanuts), in manufactured goods and preferential access to the US market, although this will only partially cover the rise in imports (particularly of consumer goods). Remittances from Nicaraguans working abroad are expected to remain buoyant and to continue to contribute to a reduction in the current account deficit. This is mainly financed by official multi- and bilateral loans which ensure half of the country's capital formation and are concentrated in mining, agriculture, telecommunications and energy.
President Daniel Ortega and his party, the Sandinista National Liberation Front (FSLN), won a third consecutive term in the November 2016 presidential elections. With a majority in the National Assembly and known for his distinct interventionism in all the country's political, administrative and legal processes, the president is accused of having acted to prevent his more popular opposition rival, Eduardo Montealegre, leader of the Independent Liberal Party (PLI) from running for the presidency. With no real opposition, the president and his wife, Rosario Murilo (vice-president) were elected with 72.5% of the votes cast, whereas his rival the center-right candidate only received 14.2% of the votes cast. The government's political maneuvering has attracted the attention of the international media and the American Congress worried about the electoral process in Nicaragua. While Venezuela's capacity to provide the country with financial support is reducing, President Ortega will have to work on assuaging the criticisms directed against his administration and strengthening ties with the United States in order to avoid sanctions regarding access to external finance, since the United States has a right to veto loan transactions awarded by the Inter-American Development Bank.