Nicaragua: 2023 Article IV Consultation-Press Release; and Staff Report

The 2023 Article IV Consultation highlights that Nicaragua’s economy has remained resilient in the face of multiple shocks, supported by appropriate economic policies, substantial buffers, and multilateral support. The external and fiscal positions are assessed to be sustainable under the baseline scenario, given the current policy mix and financing plans. In 2024 and the medium-term real Gross domestic Product (GDP) growth is expected to converge to potential sustained by domestic demand and remittances. Risks to this outlook include on the upside higher than projected real GDP growth due to sustained recovery in the domestic demand and remittances, especially in the near term, and on the downside a deterioration in the terms of trade, a more severe global downturn than currently incorporated into the baseline scenario, natural disasters, and stricter international sanctions. The report suggests investing in human capital and infrastructure; implementing policies to raise labor force participation and enhance the business environment by strengthening government institutions and frameworks in the areas of contract enforcement, protecting property rights, and resolving insolvencies.