Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Nicaragua, the second poorest country in the Western Hemisphere with a 2021 GDP per capita of approximately $2,100, is an authoritarian state under the rule of Daniel Ortega. The United States is Nicaragua’s largest trading partner, the source of roughly one-quarter of Nicaraguan imports and the destination for two-thirds of Nicaraguan exports. Nicaragua’s economy continues to suffer from an ongoing political and economic 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. The regime’s authoritarian rule fuels corruption and impunity, increases investment risk, and erodes investor confidence.
Rising inflation exacerbates the economic hardships in Nicaragua that – along with the regime’s intensifying repression – drives record Nicaraguan migration to the United States. Nicaragua faces some of the highest food prices and among the most expensive energy costs in Latin America. In May 2022, the price of Nicaragua’s basket of goods and services – a key measure of inflation’s impact on the general population – rose to a record high of $480 per month, more than double the minimum wage of $200. Remittances in 2021 from the rising ranks of Nicaraguan migrants in the United States reached $1.4 billion – or 11 percent of Nicaragua’s GDP – preventing thousands of vulnerable families from falling further into poverty.
After three years of recession from 2018 to 2020, Nicaragua’s economy rebounded in 2021 with 10 percent GDP growth, driven by resurgent demand for global commodities (particularly gold), strong growth in remittances from the Nicaraguan diaspora in the United States, and generous credits from international financial institutions. Official and independent estimates predict GDP growth will slow significantly in 2022 to less than 3 percent. Formal employment recovered slightly in 2021 but has not returned to 2018 pre-crisis levels. Some 140,000 formal sector jobs have disappeared from the economy and Nicaraguan families now earn 15 percent less on average than in 2018.
The United States and like-minded international partners have imposed a range of economic and visa sanctions on individuals and entities in Nicaragua linked to human rights abuses, corruption, and the undermining of democracy. For more information on sanctions, 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.