_________________________________________________________________________________________________________________________________________________________
      Country Report
      Nicaragua
      Generated on December 19th 2021
      Economist Intelligence Unit
      20 Cabot Square
      London E14 4QW
      United Kingdom
      _________________________________________________________________________________________________________________________________________________________
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         Nicaragua                                                                    1
                   Nicaragua
                   Summary
                   2
                               Briefing sheet
                   Outlook for 2022-26
                   5
                               Political stability
                   6
                               Election watch
                   6
                               International relations
                   7
                               Policy trends
                   7
                               Fiscal policy
                   8
                               Monetary policy
                   8
                               International assumptions
                   8
                               Economic growth
                   10
                               Inflation
                   10
                               Exchange rates
                   10
                               External sector
                   10
                               Forecast summary
                   Data and charts
                   11
                               Annual data and forecast
                   12
                               Quarterly data
                   13
                               Monthly data
                   14
                               Annual trends charts
                   15
                               Monthly trends charts
                   16
                               Comparative economic indicators
                   Summary
                   16
                               Basic data
                   18
                               Political structure
                   Recent analysis
                   Politics
                   20
                               Analysis
                   Economy
                   22
                               Forecast updates
         Country Report December 2021  www.eiu.com             © Economist Intelligence Unit Limited 2021
             Nicaragua                                                                                                       2
              Briefing sheet
              Editor:                Abhijit Surya
              Forecast Closing Date: December 7, 2021
              Political and economic outlook
                Nicaragua is a small, open economy that is highly dependent on agriculture and light
                manufacturing. A poor business environment, persistent political conflict and limited access to
                private-sector finance all weigh on the country's long-term growth prospects.
                The president, Daniel Ortega, and the vice-president, Rosario Murillo (who is also the
                first lady), won re-election in November in a stage-managed election with only token
                opposition. The duo's absolute control over state institutions and the security forces will allow
                them to continue developing their dynastic authoritarian regime.
                There will be a risk of ad hoc state interventionism—primarily in terms of tax and regulatory
                enforcement—aimed at undermining regime opponents. However, broadly speaking, the
                government will retain an orthodox policy framework, with the private sector driving (modest)
                productivity gains in the 2022-26 forecast period.
                A bumper recovery in 2021—spurred largely by extremely supportive external conditions—has
                helped the Nicaraguan economy to recover quickly to levels seen before the covid-19
                pandemic. However, growth is set to slow markedly in 2022-26, reflecting a lack of private-
                sector credit, a poor business environment and a moderation in external demand.
                The Ortega regime received significant multilateral funding for pandemic assistance and post-
                hurricane reconstruction in 2021. However, sources of financing will dwindle over the medium
                term, raising pressure on the fiscal accounts and on the reserves position.
                Recurring political conflict and weak confidence in the rule of law will subdue growth
                prospects, despite lucrative opportunities in mining, energy and manufacturing. Nicaragua will
                therefore remain one of the poorest countries in the region.
                The US and its allies will increase pressure on the Nicaraguan regime to undertake pro-
                democracy reforms. Although EIU believes that Western powers will refrain from imposing
                destabilising economy-wide sanctions, there are risks to this assumption.
              Key indicators
                                                           2021a   2022b   2023b  2024b   2025b   2026b
              Real GDP growth (%)                             8.5     2.0    2.0     1.7     1.7     1.7
              Consumer price inflation (av; %)                4.7     5.7    4.6     4.4     4.3     4.1
              Government balance (% of GDP)                  -2.7    -1.2    -1.2    -1.4    -1.5    -2.0
              Current-account balance (% of GDP)             -1.4    -1.0    -0.5    1.0     1.7     1.8
              Short-term interest rate (av; %)                3.6     3.8    4.0     4.2     4.2     4.2
              Unemployment rate (%)                           5.0     4.9    4.9     4.8     4.8     4.7
              Exchange rate C:US$ (av)                      35.20  35.90   36.62   37.35   38.10   38.86
              a            b
                EIU estimates.   EIU forecasts.
             Country Report December 2021                www.eiu.com                        © Economist Intelligence Unit Limited 2021