Nicaaragua’s economy is slowing down: GDP growth for Q1 was 3.7%

Photo of author

By LatAm Reports Staff Writers

Nicaragua’s economy is slowing: GDP grew 3.7% in the first quarter

These are the activities that are contributing to growth and the ones that are contracting. Meanwhile, remittances give the economy a break

Nicaragua’s Gross Domestic Product expanded 3.7 percent in the first quarter of this year, according to the highest bank issuer. This performance is lower than the 5.2 percent observed in the previous quarter (October-December) and slightly better than 3.5 percent in the same period last year.

Thus, the economy in the last 12 months has shown a 4.6 percent rebound, due to the most robust growth experienced in the third and fourth quarters of last year, where increases of 6 and 5.2 percent were observed, respectively.

In the first quarter of this year, the economy was driven by hotels and restaurants (17.6 percent growth), construction (16 percent), electricity (8.9 percent), water (8.5 percent), trade (7.3 percent), mine and quarry exploitation (5.1 percent).

It also affected dynamism in the sectors such as financial intermediation and related services (5.1 per cent), livestock (3.8 per cent) and transport and communications (3.4 per cent), among other economic activities.

The sectors that fall

One of the key sectors in the formation of GDP is agriculture, which only expanded 0.6 percent in the first quarter, where more work was reported in sugarcane, tobacco and peanut crops, among other products.

Fishing and aquaculture decreased 14.7 per cent, due to a fall in the production of shrimp and lower catching fish and shrimp; partially offset by increases in the catch of lobster, jaiba, snail and sea cucumber.

There is also bad news in the manufacturing industry, which contracted in the first three months of this year 2.2 percent. This behaviour was the result of the lower production of harnesses, textiles, dairy and cigars, mainly; however, growth was observed in the production of beverages, meat products, petroleum derivatives, non-metallic, among others, according to the NCB.

Key growing rethings

Because of the spending approach, the NCB said that consumption increases year-on-year of 4 percent, due to increases in private and public consumption.

In this regard, household consumption and private consumption grew 4 per cent in the quarter, due in part to increases in remittances from abroad, consumer credit and employment, the NCB said.

For its part, government demand expanded 3.6 percent and gross capital formation 24.8 percent.

Private fixed investment registered a growth of 5.7 percent, as a result of growth in construction (2.6 percent), machinery and equipment (8.2 percent), and other investments (3.2 percent).

Public fixed investment grew 20.3 percent by mixed behavior in its components; growth in construction (24.5 percent) and other investments (2.9 percent); and decrease in the machinery and equipment component (-0.9 percent).

Exports contract

A key sector, but on the negative side, is exports of goods and services. These fall 5.8 percent in the first quarter. Exports of coffee, sugar, dairy, textiles and harnesses decreased, among others; and the export of meat and fish, mining products, other industrial foods and beverages increased, among others.

However, in the exports of services, there was an increase in professional services, postal and postal services, seaports, airport, among others.

Poor export performance was supported by a slight increase in imports, which moved at a positive rate of 0.8 percent. In goods, growth was observed in the import of meat and fish, dairy, beverages, tobacco, petroleum products, non-metallic products and transport equipment, among others.

In contrast, there was a decrease in the purchase of textile, chemical, wood and wood products, among others. While the services saw a decrease in leisure, cultural and sports services, water transport services, commercial bank financial services, air transport services, among others.

This article has been translated after first appearing in La Prensa Ni