Nicaragua’s Economic Indicators are Misleading
By Eric Robinson
A new report from Nicaragua’s Central Bank indicates its macroeconomic numbers are very impressive. They are about to exceed $1 billion in exports this year, international reserves are now at $874 million, growing three-fold over the last five years, direct investment will reach $290 million, employment is growing at 9.2%, the trade deficit is decreasing, foreign debt is the lowest in a decade, the Gross Domestic Product is nearing $5 billion, and inflation is under 10%. Family remittance money sent back to the country by Nicaraguans living abroad is up 12%, tourism is up 14%, and free trade zone activity is up 20%.
Inspite of these impressive figures, the economy is only growing about 3% per year because of weak institutional order, inadequate infrastructure and dependence on foreign oil. The National Council of Economic and Social Planning says that these strong macroeconomic indicators don’t mean much when most of the country is living in poverty. 80% of the population lives off of less than $2 per day per person, and 45% live off less than $1 per day. They say that unless something is done to change the way wealth is distributed in Nicaragua, things will get worse regardless of the national macroeconomic security. The country is not productive, and depends too much on international handouts in the forms of family remittances, foreign donations, loans and renegotiations of terms of debt.
With a new government coming in soon, implimenting an intuitive national development plan to get the production up and the economy rolling will be a priority if things are to change for the better for all Nicaraguans. With such cheap labor and free trade with the US, perhaps global inequalities will start to balance out a bit more. Those living in Costa Rica have seen that Nicas are great workers, and tend to do many of the jobs Ticos prefer to avoid.