Economy of Nicaragua

| inflation = 5% (2024)

| hdi =

| unemployment = 6.8% (2024)

| imports = $8.65 billion (2021)

| current account = −$694 million (2017 est.)

| revenue = 3.871 billion (2017 est.) Nicaragua's economy continues to post growth, with preliminary indicators showing the Nicaraguan economy growing an additional 5% in 2011. Consumer Price inflation have also curtailed since 2008, when Nicaragua's inflation rate hovered at 19.82%. In 2009 and 2010, the country posted lower inflation rates, 3.68% and 5.45%, respectively.

Nicaragua is primarily an agricultural country, but construction, mining, fisheries, and general commerce also have been expanding during the last few years. Foreign private capital inflows topped $300 million in 1999 but, due to economic and political uncertainty, fell to less than $100 million in 2001. In the last 12 years, tourism has grown 394%, the rapid growth has led it to become Nicaragua's second largest source of foreign capital. Less than three years ago, the nation's tourism budget was U.S. $400,000; today, it is over $2 million. the majority of which is in and around Managua.

Nicaragua faces a number of challenges in stimulating rapid economic growth. An International Monetary Fund (IMF) program is currently being followed, with the aim of attracting investment, creating jobs, and reducing poverty by opening the economy to foreign trade. This process was boosted in late 2000 when Nicaragua reached the decision point under the Heavily Indebted Poor Countries (HIPC) debt relief initiative. However, HIPC benefits were delayed because Nicaragua subsequently fell "off track" from its IMF program. The country also has been grappling with a string of bank failures that began in August 2000. Moreover, Nicaragua continues to lose international reserves due to its growing fiscal deficits.

The country is still a recovering economy and it continues to implement further reforms, on which aid from the IMF is conditional. In 2005, finance ministers of the leading eight industrialized nations (G8) agreed to forgive some of Nicaragua's foreign debt, as part of the HIPC program. According to the World Bank Nicaragua's GDP was around $4.9 US billion dollars. Recently, in March 2007, Poland and Nicaragua signed an agreement to write off $30.6 million which was borrowed by the Nicaraguan government in the 1980s.

The U.S. is the country's largest trading partner, providing 25% of Nicaragua's imports and receiving about 60% of its exports. About 25 wholly or partly owned subsidiaries of U.S. companies operate in Nicaragua. The largest of those operations are in the energy, communications, manufacturing, fisheries, and shrimp farming sectors. Opportunities exist for expanded foreign investments in those sectors, as well as in tourism, mining, franchising, and the distribution of imported consumer, manufacturing, and agricultural goods. There also are copper mines in northeastern Nicaragua.

Gross Domestic Product (GDP) in purchasing power parity (PPP) in 2012 was estimated at US$20.04 billion, and GDP per capita in PPP at US$3,300, making Nicaragua the second poorest country in the Western Hemisphere. The service sector is the largest component of GDP at 56.7%, followed by the industrial sector at 25.8%(2012). Agriculture represents 17.5% of GDP and it's the largest percentage in a Central American country. Nicaraguan labor force is estimated at 2.961 million of which 28% is occupied in agriculture, 19% in the industry sector and 53% in the service sector (2012). Unemployment was 7.2% in 2023.

Sectors

Agriculture and food production

{| style="width: 26em; font-size: 85%; text-align: left;" class="wikitable floatright"

|+Food and agriculture

! style="background:#e9e9e9;" | Product

! style="background:#e9e9e9;" | World rank

| style="background:#f0f0f0;" |Coffee, green

| style="background:#f0f0f0;" align=right| 4

|Beans, Dry

|align=right|17

|Groundnuts in Shell

|align=right|30

| style="background:#f0f0f0;" |Indigenous cattle meat

| style="background:#f0f0f0;" align=right|30

|Plantains

| align=right|32

|style="background:#f0f0f0;"|Sesame Seed

|style="background:#f0f0f0;" align=right|32

|Sugar Cane

| align=right|32

|style="background:#f0f0f0;"|Pineapples

|style="background:#f0f0f0;" align=right|33

|Castor Beans

| align=right|37

|style="background:#f0f0f0;"|Cocoa beans

|style="background:#f0f0f0;" align=right|41

|Cassava

| align=right|48

|style="background:#f0f0f0;"|Oranges

|style="background:#f0f0f0;" align=right|49

|Soybeans

| align=right|50

Coffee became Nicaragua's principal crop in the 1870s, a position it still held in 1992 despite the growing importance of other crops. Cotton gained importance in the late 1940s, and in 1992 was the second biggest export earner. In the early 20th century, Nicaraguan governments were reluctant to give concessions to the large United States banana companies, and bananas never attained the level of prominence in Nicaragua that they reached in Nicaragua's Central American neighbors; bananas were grown in the country, however, and were generally the third largest export earner in the post-World War II period. Beef and animal byproducts, the most important agricultural export for the three centuries before the coffee boom of the late 19th century, were still important commodities in 1992.

From the end of World War II to the early 1960s, the growth and diversification of the agricultural sector drove the nation's economic expansion. From the early 1960s until the increased fighting in 1977 caused by the Sandinista revolution, agriculture remained a robust and significant part of the economy, although its growth slowed somewhat in comparison with the previous postwar decades. Statistics for the next fifteen years, however, show stagnation and then a drop in agricultural production.

The agricultural sector declined precipitously in the 1980s. Until the late 1970s, Nicaragua's agricultural export system generated 40 percent of the country's GDP, 60 percent of national employment, and 80 percent of foreign exchange earnings. Throughout the 1980s, the Contras destroyed or disrupted coffee harvests as well as other key income-generating crops. Private industry stopped investing in agriculture because of uncertain returns. Land was taken out of production of export crops to expand plantings of basic grain. Many coffee plants succumbed to disease.

In 1989, the fifth successive year of decline, farm production declined by roughly 7 percent in comparison with the previous year. Production of basic grains fell as a result of Hurricane Joan in 1988 and a drought in 1989. By 1990 agricultural exports had declined to less than half the level of 1978. The only bright spot was the production of nontraditional export crops such as sesame, tobacco, and African palm oil.

Construction

Energy

Mining

Services

The service sector was estimated to account for 56.8% of the country's GDP, and employs 52% of the active population. The growth in tourism has positively affected the agricultural, commercial, finance, and construction industries as well.

Transport

Water supply and sanitation

Current economic outlook

Nicaragua has ratified Free Trade Agreements with major markets such as the United States, the Dominican Republic (DR-CAFTA), Taiwan and Mexico, among others. As evidence of continuous efforts in improving the business climate, Nicaragua has been ranked favorably in a variety of independent evaluations.

The 2011 Doing Business Report, published by The World Bank Group, a report that benchmarks various indicators of the investment climate in 183 nations, ranked Nicaragua as the top location in Central America in starting a business, investor protection, and closing a business. Additionally, the country improved in the following categories: ease of doing business, registering property, paying taxes, trading across borders, and enforcing contracts.

Data

The following table shows the main economic indicators in 1980–2020 (with IMF staff stimtates in 2021–2026). Inflation below 5% is in green.

{| class="wikitable" style="text-align:center;"

!Year

!GDP

(in Bil. US$PPP)

!GDP per capita

(in US$ PPP)

!GDP

(in Bil. US$nominal)

!GDP per capita

(in US$ nominal)

!GDP growth

(real)

!Inflation rate

(in Percent)

!Unemployment

(in Percent)

!Government debt

(in % of GDP)

|1980

|6.2

|n/a

|1.8

|n/a

|4.6%

|35.1%

|13.4%

|n/a

|1981

|7.1

|n/a

|2.2

|n/a

|5.4%

|23.8%

|11.8%

|n/a

|1982

|7.5

|n/a

|2.5

|n/a

|-0.8%

|28.5%

|12.4%

|n/a

|1983

|8.2

|n/a

|2.9

|n/a

|4.6%

|33.6%

|11.0%

|n/a

|1984

|8.3

|n/a

|4.0

|n/a

|-1.6%

|141.3%

|12.0%

|n/a

|1985

|8.2

|n/a

|3.9

|n/a

|-4.1%

|571.4%

|12.5%

|n/a

|1986

|8.3

|n/a

|5.8

|n/a

|-1.0%

|885.2%

|13.1%

|n/a

|1987

|8.5

|n/a

|3.4

|n/a

|-0.7%

|13,109.5%

|14.0%

|n/a

|1988

|7.7

|n/a

|1.5

|n/a

|-12.4%

|4,775.2%

|14.2%

|n/a

|1989

|7.8

|n/a

|2.1

|n/a

|-1.7%

|7,428.7%

|15.0%

|n/a

|1990

|8.1

|n/a

|0.5

|n/a

|-0.1%

|3,004.1%

|15.5%

|n/a

|1991

|8.4

|n/a

|3.7

|n/a

|-0.2%

|116.6%

|14.9%

|n/a

|1992

|8.6

|n/a

|3.9

|n/a

|0.4%

|21.9%

|14.4%

|n/a

|1993

|8.8

|n/a

|3.7

|n/a

|-0.4%

|13.5%

|15.0%

|n/a

|1994

|9.4

|2,191.5

|3.9

|898.2

|5.0%

|3.7%

|17.1%

|n/a

|1995

|10.2

|2,301.4

|4.1

|935.3

|5.9%

|11.1%

|16.9%

|n/a

|1996

|11.0

|2,425.3

|4.3

|947.1

|6.3%

|11.7%

|16.0%

|n/a

|1997

|11.7

|2,498.7

|4.4

|940.1

|4.0%

|9.2%

|14.3%

|86.4%

|1998

|12.2

|2,568.9

|4.6

|973.1

|3.7%

|13.0%

|13.2%

|86.5%

|1999

|13.3

|2,733.8

|4.9

|999.4

|7.0%

|11.2%

|10.7%

|99.8%

|2000

|14.1

|2,852.6

|5.1

|1,030.7

|4.1%

|11.5%

|9.8%

|95.2%

|2001

|14.9

|2,942.9

|5.3

|1,054.7

|3.0%

|7.4%

|6.4%

|87.5%

|2002

|15.2

|2,950.8

|5.2

|1,011.9

|0.8%

|3.8%

|12.2%

|110.4%

|2003

|15.9

|3,023.2

|5.3

|1,010.2

|2.5%

|5.3%

|7.0%

|109.5%

|2004

|17.2

|3,204.1

|5.8

|1,077.8

|5.3%

|8.5%

|6.5%

|84.0%

|2005

|18.5

|3,377.8

|6.3

|1,152.8

|4.3%

|9.6%

|5.6%

|66.6%

|2006

|19.8

|3,588.9

|6.8

|1,224.7

|3.8%

|9.1%

|5.2%

|51.2%

|2007

|21.4

|3,822.5

|7.4

|1,326.7

|5.1%

|11.1%

|5.9%

|30.9%

|2008

|22.5

|3,977.5

|8.5

|1,498.9

|3.4%

|19.8%

|6.1%

|26.0%

|2009

|21.9

|3,821.7

|8.3

|1,444.9

|-3.3%

|3.7%

|8.2%

|29.3%

|2010

|23.2

|3,987.4

|8.8

|1,506.1

|4.4%

|5.5%

|7.8%

|30.3%

|2011

|25.2

|4,196.7

|9.8

|1,630.0

|6.3%

|8.1%

|5.9%

|28.8%

|2012

|26.5

|4,363.4

|10.5

|1,734.8

|6.5%

|7.2%

|5.9%

|27.9%

|2013

|28.0

|4,556.3

|11.0

|1,790.4

|4.9%

|7.1%

|5.7%

|28.8%

|2014

|30.4

|4,897.5

|11.9

|1,916.8

|4.8%

|6.0%

|6.6%

|28.7%

|2015

|32.9

|5,260.5

|12.8

|2,036.9

|4.8%

|4.0%

|5.9%

|28.9%

|2016

|35.9

|5,672.5

|13.3

|2,099.6

|4.6%

|3.5%

|4.5%

|30.9%

|2017

|38.3

|5,995.6

|13.8

|2,156.1

|4.6%

|3.9%

|3.7%

|34.1%

|2018

|37.9

|5,871.2

|13.0

|2,016.2

|-3.4%

|4.9%

|5.5%

|37.7%

|2019

|37.2

|5,697.3

|12.6

|1,934.1

|-3.7%

|5.4%

|6.1%

|41.7%

|2020

|36.9

|5,679.2

|12.6

|1,942.6

|-2.0%

|3.7%

|7.3%

|47.9%

|2021

|40.1

|6,132.8

|13.4

|2,047.1

|5.0%

|4.1%

|11.1%

|49.5%

|2022

|42.7

|6,454.9

|13.9

|2,109.3

|3.5%

|3.6%

|7.5%

|48.1%

|2023

|44.7

|6,684.3

|14.3

|2,143.8

|2.2%

|3.5%

|7.2%

|48.9%

|2024

|46.8

|6,928.6

|14.7

|2,183.2

|2.4%

|3.5%

|6.8%

|50.1%

|2025

|49.0

|7,188.3

|15.3

|2,237.7

|2.6%

|3.5%

|6.4%

|50.6%

|2026

|51.4

|7,461.3

|15.9

|2,312.8

|2.8%

|3.5%

|6.0%

|50.6%

Other statistics

thumb|Historical GDP per capita development of Nicaragua

Household income or consumption by percentage share: lowest 10%: 1.4%; highest 10%: 41.8 (2005)

Industrial production growth rate: 2.4% (2005)

Electricity - production: 2.778 billion kWh (2006)

Electricity - production by source: fossil fuel: 53.43%; hydro: 35.34%; nuclear: 0%; other: 11.23% (1998). A large number of wind turbines have been installed along the SW shore of Lake Nicaragua since, and some geothermal plants have been constructed as well. As of 2013, the breakdown was: fossil fuel: 50%; wind power: 15%; geothermal: 16%, hydropower: 12%, biomass power: 7%.

Electricity - consumption: 2.929 billion kWh (2006)

Electricity - exports: 69.34 million kWh (2006)

Electricity - imports: 0 kWh (2006)

Agriculture - products: coffee, bananas, sugarcane, cotton, rice, corn, tobacco, sesame, soya, beans, beef, veal, pork, poultry, dairy products; shrimp, lobsters

Exports - commodities: coffee, beef, shrimp, lobster, cotton, tobacco, peanuts, sugar, bananas, gold

Imports - commodities: consumer goods, machinery equipment, raw materials, petroleum products

Currency: 1 gold Cordoba (C$) = 100 centavos

Exchange rates: Córdoba (C$) per US$1 – 17.582 (2006), 16.733 (2005), 15.937 (2004), 15.105 (2003), 14.251 (2002)

Price inflation:

2007: 16.88%
2008: 13.37%