Nicaragua is going through a decline in its economic activity, mainly influenced by a decline in important activities for the national economy such as the manufacturing industry, fishing and agriculture, areas that must be kept under surveillance, economists from the organization Consultores Para el Business Development, SA (COPADES),
In a analysis of the Monthly Economic Activity Index (IMAE) of the countrypublished in the Economy Blog, by Néstor Avendaño, COPADES economists Hendricks Balladares and Jovan Guerrero maintain that Nicaragua’s IMAE maintains “stable growth”, however, they warn that “there are underlying elements that must be monitored.”
Economists take into account that, according to official data from the Central Bank of Nicaragua (BCN), as of March 2024, the Nicaraguan economy continues to grow, registering an interannual variation in the annual average IMAE of 4.52%. “Economic activity on the supply side of goods and services is growing, even above the current potential annual average IMAE growth rate, which we estimate at 3.22%,” analyze the members of COPADES.
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But they point out that a “slight slowdown” is reflected with respect to its level recorded in December 2023 (4.57%), and with respect to that observed in February 2024 (4.68%).
Agriculture, fishing and manufacturing are concerned
Analysts highlight that, by economic activity, the annual average IMAE, as of March 2024, registers strong year-on-year growth in economic activities such as hotels and restaurants, (20.4%); Energy and water, (14.7%); a very good performance of the mining and quarrying sector, having registered a growth of 10.6%, “explained by an increase in the production of metals, especially silver, whose production grew 71.5% last year, and in the January-March period 2024 has grown up to 41.3%.
They also point to growth in the construction sector with 10.2%; in financial intermediation and related services, which grew 5.5%.
Despite these figures, seen as encouraging, economists maintain that “the performance of fishing and aquaculture activity is of concern, whose production has decreased in the last 12 months at a rate of 17.1% compared to the previous 12 months (April 2022 – March 2023). ), and agricultural activity is also on the negative side, with a year-on-year decrease of 3.8%.
«Fishing and aquaculture contributed to the slowdown in the growth of the original IMAE in March 2024, and which has been showing negative behavior for most of 2023 (except for the months of March and December) and so far in 2024 (-9.79 % in March), mainly explained by the sharp annual drop in both cultivation (-39.42% in 2023 and -42.96% in January-March 2024) and shrimp catch (-10.14% in 2023 and -46.16% in January- March 2024)”, states the report prepared by COPADES economists.
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Adding to this concern is “the considerable drop in manufacturing activity (-5.68%), a sector that is affected by lower demand from American customers for products related to the textile and clothing industry, which has affected performance.” of said activity throughout the Central American region.
Economists argue that official data show that, during the January-March 2024 period, FOB exports (goods with prices at ports of shipment) of manufactured products fell 3.06% in relation to January-March 2023, and that exports of the category of textiles and clothing decreased 21.46% when comparing the same periods.
Manufacturing industry in critical condition.
Balladares and Guerrero affirm that, although it is very likely that, once the seasonal effect caused by the Easter holidays has passed, trade and services activities will show a recovery that will make the IMAE grow again, even above 4.0%. , “the critical performance of manufacturing activity is of concern, since it is the activity that makes the greatest contribution to the formation of the Gross Domestic Product (15.4% of GDP in 2023”
They warn that, “an even more drastic and prolonged fall over time in this sector (manufacturing) may limit the growth rate of the annual average IMAE in the last months of the year, and cause it to decelerate to a level at least close to its current level.” potential growth that we estimate at 3.2%.
