Economy of Nicaragua

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Nicaraguas GDP per capita ranks #158. With low per capita income, flagging socio-economic indicators, and huge external debt. The country has made significant progress toward macro-economic stabilization over the past few years - even with the damage caused by Hurricane Mitch in the fall of 1998. International aid, debt relief, and continued foreign investment have contributed to the stabilization process. GDP grew 6.3% in 1999, while inflation remained about 12%, and unemployment dropped. In 2005, finance ministers of the leading eight industrialized nations (G-8) agreed to forgive Nicaragua's foreign debt, as part of the HIPC program. Aid is conditioned on improving governability, the openness of government financial operations, poverty alleviation, and human rights.

1 Economy
2 Statistics
3 See also
4 External links

[edit] Economy

Nicaragua's economy was ravaged in the 1980s by the Contra War, which saw the destruction of much of the country's infrastructure. At the same time, the US staged an economic blockade from 1985 onwards.

Following the end of the war and the defeat of the Sandinistas in the 1990 general election, Nicaragua began free market reforms, privatizing more than 350 state enterprises. Since then, inflation has been reduced from 33,603% to 8%, and the government's foreign debt has been cut in half. The economy began expanding in 1991 and grew 2.5% in 2001. In 2001, the global recession, combined with a series of bank failures, low coffee prices, and a drought, caused the economy to retract.

As of 2006, Nicaragua is ranked #158 over Honduras, and Haiti, with a per capita GDP of around $3,000. [1] Unemployment is officially 3.8% (2006 est.), and another 46.5% (2006 est.) are underemployed. Nicaragua suffers from persistent trade and budget deficits and a high debt-service burden, leaving it highly dependent on foreign assistance--as much as 25% of GDP in 2001.

One of the key engines of economic growth has been production for export. Exports were 640 million in 2001. Although traditional products such as coffee, meat, and sugar continued to lead the list of Nicaraguan exports, the fastest growth is now in nontraditional exports: maquila goods (apparel); gold; seafood; and new agricultural products such as peanuts, sesame, melons, and onions. Nicaragua also depends heavily on remittances from Nicaraguans living abroad.

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 recent years, tourism has grown rapidly to become Nicaragua's third largest source of foreign capital.

There are copper mines in northeastern Nicaragua.

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 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 investments are in the energy, communications, manufacturing, fisheries, and shrimp farming sectors. Good opportunities exist for further investments in those same sectors, as well as in tourism, mining, franchising, and the distribution of imported consumer, manufacturing, and agricultural goods.

[edit] Statistics

GDP: purchasing power parity - $16.83 billion (2006 est.)

GDP - real growth rate: 2.5% (2006 est.)

GDP - per capita: $3,000 (2006 est.)

GDP - composition by sector:
agriculture: 17.3%
industry: 25.8%
services: 56.8% (2006 est.)

Population below poverty line: 50% (1999 est.)

Household income or consumption by percentage share:
lowest 10%: 1.6%
highest 10%: 39.8% (1993)

Inflation rate (consumer prices): 9.4% (2006 est.)

Labor force: 2.261 million (2006 est.)

Labor force - by occupation: services 52.2%, agriculture 30.5% , industry 17.3% (1999 est.)

Unemployment rate: 3.8% (2006 est.); considerable underemployment

Budget:
revenues: $945.3 million
expenditures: $1.254 billion; including capital expenditures of $NA (2006 est.)

Industries: food processing, chemicals, machinery and metal products, textiles, clothing, petroleum refining and distribution, beverages, footwear, wood.

Industrial production growth rate: 2.4% (2005 est.)

Electricity - production: 2.766 billion kWh (2004)

Electricity - production by source:
fossil fuel: 53.43%
hydro: 35.34%
nuclear: 0%
other: 11.23% (1998)

Electricity - consumption: 2.573 billion kWh (2004)

Electricity - exports: 22 million kWh (2004)

Electricity - imports: 23 million kWh (2004)

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

Exports: $1.714 billion f.o.b.; note - includes free trade zones (2006 est.)

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

Exports - partners: US 34.1%, El Salvador 14.3%, Honduras 7.9%, Costa Rica 6.1%, Guatemala 5.2%, Mexico 5.1%, Spain 4.2% (2005)

Imports: $3.202 billion f.o.b. (2006 est.)

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

Imports - partners: US 20.1%, Venezuela 11.9%, Costa Rica 8.9%, Mexico 8.3%, Guatemala 7%, El Salvador 5.1%, Japan 4.5%, Ecuador 4.2% (2005)

Debt - external: $3.7 billion (2006 est.)

Economic aid - recipient: $419.5 million (2005 est.)

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

Exchange rates: gold Cordoba (C$) per US$1 - 17.6 (July 2006), 12.29 (December 1999),11.81 (1999), 10.58 (1998), 9.45 (1997), 8.44 (1996), 7.55 (1995)

Fiscal year: calendar year