Nicaragua's Economy with Good Expectations for 2010

    WASHINGTON, DC, July 01, 2010 /24-7PressRelease/ -- The accumulated Foreign Direct Investment (FDI) inflows in Nicaragua for 2007 and 2008 exceeded US$1 billion, which is more than the total flows received in the previous four-year period from 2003 to 2006. In 2008 alone, FDI increased 64 percent, reaching a historical record of US$626.1 million. FDI Inflows in 2009 fell 31 percent to US434 million due to international financial crisis, while the rest of the region averaged a 33 percent drop. However, according to a 2010 study conducted by the Latin Business Chronicle, Nicaragua remains the third leading nation in Latin America when measuring FDI as a percent of each country's GDP for the second consecutive year.

Nicaragua's Gross Domestic Product (GDP) in 2009 decreased 1.5 percent in 2009 in comparison to 2008, according to the International Monetary Fund (IMF). However, when compared to countries such as Chile (-1.5), Honduras (-1.9), the U.S. (-2.4) and El Salvador (-3.5), it can be concluded that the economic crisis had a smaller impact on Nicaragua.

The textile industry has become one of the most dynamic sectors of the economy. During the 2004-2008 period, Nicaragua's textile and apparel industry has experienced a compound annual growth rate (CAGR) of 12 percent in exports' value and 17.2 percent growth in export volume. In 2009, both export value and volume decreased by 4 and 7 percent, respectively, as a consequence of the negative repercussions of the international financial crisis on American apparel imports. However, Nicaragua's performance was by far the most resilient in the region: as of April 2010, Nicaragua became the 13th largest apparel exporter to the United States, improving from the 17th position in 2008, according to the Office of Textiles and Apparel of the US Department of Commerce (OTEXA).

According to 2009 data from the Central American Tourism Integration Secretariat (SITCA, for its acronym in Spanish), Nicaragua was the only country in Central America that registered positive growth in both tourism arrivals and tourism revenues. Arrivals increased 8.6 percent compared to 2008, with a total of 931,904 visitors, and tourism revenues reached up to US$345.9 million, representing an increase of 25.2 percent.

Also, Nicaragua exports have experienced an upward trend in recent years, with a compound annual growth rate of 17 percent between 2004 and 2008. Once again, as a consequence of the financial crisis in 2009, exports took a slight negative turn with a decrease of 6 percent when comparing to 2008, but was the least affected country in the Central American region.

The positive results in Nicaragua's economic behavior during the last five years have granted the country international recognition regarding it as an ideal destination for foreign investment. The 2009 Latin America Globalization Index published by the Latin Business Chronicle, ranked Nicaragua as the third most globalized country among the 18 Latin American countries. Risk Briefing Services, part of the Economist Intelligence Unit (EIU), confirms that Nicaragua is one of the safest countries in the western hemisphere. The World Bank's annual Doing Business ranked Nicaragua as the fastest country in Central America in which to start a business and as the country in Central America that best protect its investors.

Experts are optimistic that during 2010 the economy will once again continue its upward trend and the Central Bank has forecasted that the national economy will have a growth rate between 1.5 and 2 percent, exports will grow between 7 and 9 percent and imports between 9 and 11 percent, while FDI is also expected to increase during this year by as much as 29 percent.

PRONicaragua is the Nicaraguan Investment Promotion Agency, established in 2002. It is a non-profit, public-private institution whose mission is to generate economic growth and job creation in Nicaragua by attracting high-quality foreign direct investment. The agency provides complimentary support services to qualified investors seeking investment opportunities in our country. For further information, please contact us at (505) 2270-6400 or at http://pronicaragua.org.

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