Nicaragua’s Growth and Prospects Analyzed by The Economist
One of the world’s most respected and influential publications, The Economist, recently turned its attention to Nicaragua, further reflecting the growing awareness of the country and its progress. While focusing initially on the upcoming presidential election in November, the article also acknowledged the increasingly capitalistic direction of the government as it works to fuel economic growth. Noted in particular were substantial exemptions from taxes for companies coming into the country for manufacturing purposes.
While pointing out the traditionally socialist attitude of current president Daniel Ortega (favored in November) and the ruling FSLN party, the article offered some positive comments from other key sources. “On a visit to Managua in July, the IMF’s deputy head praised Nicaragua’s ‘courageous’ efforts to maintain macroeconomic stability,” the article said. “The World Bank reckons it is the easiest country in Central America, Panama excepted, in which to start a new business. This year Nicaragua expects to have more foreign direct investment, as a share of its GDP, than any other country in the isthmus.”
Growing Faster Than Any Other Central American Country
While a close alliance with Venezuela continues to help the economy, Nicaragua saw its economy in 2010 grow faster than any other country in Central America, with the exception of Panama. Foreign investors, including multinational firms, are seeking and finding opportunities in Nicaragua, with the article pointing out that, for example, both Levi’s jeans and BMW parts are being produced in the country. Expected to help in the future is the tariff-free access Nicaragua enjoys with the United States as part of CAFTA.
Exports and Tourism Continue to Increase
Other recent developments not mentioned in The Economist article (August 27, 2011) are the continuing rise in tourism, with record increases in both 2009 and 2010. This number is projected to go up again in 2011. The country’s exports increased by over 30% in 2010 and are expected to achieve that same level of growth this year.
Trade with China Actively Pushed
In its ongoing drive to further energize its economy, Nicaragua recently opened a trade and investment office in China “to promote business opportunities and foster the development of economic relations between the two countries.” The opening of the trade office in Beijing is in direct response to the growing involvement of China in Latin America, with investment topping $180 billion in 2010. This amount is projected to top $220 billion in 2011. The Central Bank of Nicaragua reported the country’s exports to China rose by 121% in 2009, making it the fourth largest market in Asia at that time but still trailing other key trading partners. In terms of individual countries, the United States currently remains Nicaragua’s largest trading partner.
Personal security always is an area of concern for visitors and investors. A 2010 study by CID Gallup Latin America found that Nicaragua has the lowest incidence of crime in Central America, which reinforces other studies that have ranked the country as the safest in the region.
Real Estate Remains Stable
On top of all this positive data is the fact that real estate prices continue to be stable and comparatively low in terms to other Central American locations. Plus, the latest incentives for retirees make the New Nicaragua one of the most conducive places in the world to call home.
The results of the November election are not expected to slow the country’s economic development and desire to improve the quality of life for its citizens. The hope is, in fact, that the new government will accelerate activities and push even harder to take advantage of opportunities that exist and will arise.
View Article >>