Nicaragua: Economic Outline

Economic Indicators

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.

Monetary Indicators	2020	2021	2022	2023	2024
Nicaraguan Cordoba Oro (NIO) - Average Annual Exchange Rate For 1 GBP	44.03	48.37	44.22	45.29	46.81

Source: World Bank - Latest available data.

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Latest Update: October 2025