Nicaragua is the second poorest country in the Western Hemisphere with a 2024 GDP per capita of approximately $2,600.  The United States is Nicaragua’s largest trading partner, the source of roughly one-third of Nicaraguan imports and the destination for approximately half of Nicaraguan exports. Nicaragua’s economy continues to suffer from an ongoing political crisis. The crisis began following President Daniel Ortega and Vice President Rosario Murillo’s violent repression of peaceful demonstrations in April 2018 and deepened in 2021 as the regime jailed political opponents and private sector leaders, shuttered independent civil society organizations, and oversaw a rigged presidential election. In January 2025, Nicaragua’s National Assembly completed the ratification of sweeping constitutional changes. The constitutional changes cement Ortega and Murillo’s efforts to undermine democratic institutions since Ortega’s return to power in 2007.  Their rule, and this constitution, abolish any remnants of the separation of powers, extinguish civil liberties, and impose a personalistic, dynastic dictatorship. The evisceration of the rule of law has eroded investor confidence and increased risks for firms operating in or exporting to Nicaragua. 

 The lack of formal employment, precarious wages, and sociopolitical uncertainty exacerbate economic hardship in Nicaragua that (along with the regime’s intensifying repression) has driven record Nicaraguan migrants to the United States.  Nicaragua faces some of the highest food prices and the most expensive energy costs in Latin America. In August 2025, the price of Nicaragua’s basket of goods and services – a key measure of inflation’s impact on the general population – continued its rise to $560 per month, more than double the minimum wage of $230. Nicaragua is the most remittance-dependent country in the Western Hemisphere and the third most dependent in the world, according to a World Bank study. In 2024, Nicaraguans abroad sent home a record $5.2 billion, equivalent to 29 percent of the GDP, preventing thousands of vulnerable families from falling further into poverty. The United States was the primary source country accounting for 83 percent of those remittances ($4.3 billion). 

The Nicaraguan government has since 2019 pursued a fiscal policy designed to generate short-term budget funding instead of long-term growth. The Nicaraguan government has aggressively increased taxes, even on basic goods.  Measures passed in 2019 taxed previously exempt items in the basket of goods. An estimated 70 percent of basic household items are now taxed, including many food items. The 30 percent of products that remain exempt now face higher costs because their inputs are taxed. 

In 2024, Nicaragua’s economy grew 36 percent, driven by remittances from the Nicaraguan diaspora in the United States, increased consumer spending, exports, and financing from international financial institutions. The Central Bank of Nicaragua (BCN) estimates GDP growth between 3 to 4 percent, but independent assessments predict a decline to 2.9 percent in 2025.  Formal employment recovered slightly in 2024 but has not returned to 2018 pre-crisis levels with some 111,800 fewer formal sector jobs than in 2018. 

The Nicaraguan government’s repression of political opponents and the private sector, and systematic erosion of the rule of law, have created obstacles that make it challenging to do business in Nicaragua. The international community has applied a range of sanctions on individuals and entities linked to human rights abuses and corruption. For more information on sanctions and sanctioned individuals, see the U.S. Department of Treasury’s summary of Nicaragua-related sanctions and the Global Magnitsky Designations for Nicaragua. Businesses should exercise extreme caution when dealing with Nicaraguan entities to ensure compliance with applicable sanctions.