Nicaragua Economic Conditions

Reduced social differences

Nicaragua has had a relatively stable macroeconomic development in recent years. Annual economic growth has been around 4 percent, giving real growth in population growth taking into account. Poverty has been somewhat reduced since 2005, according to figures from the United Nations Economic Commission for Latin America and the Caribbean (CEPAL). From 61.9 percent in 2005, 58.3 percent of the population lived in poverty in 2009. The proportion of people living in extreme poverty has also decreased correspondingly, from 31.9 percent in 2005 to 29.6 percent in 2009. Calculations However, CEPAL shows that the economic differences in the countries have been reduced since 2001. At the same time, the country has fallen from 120th place on the UN Human Development Index (HDI) in 2008 to 132nd place in 2013.

Together with the other Central American countries, Nicaragua signed a cooperation agreement with the EU in 2012 (Acuerdo de AsociaciĆ³n UE-CA). The agreement has been referred to as an alternative free trade agreement and is intended to secure access to the European market for Central American goods. At the same time, the EU provides major benefits and access in key areas such as energy, telecommunications, the exploitation of natural resources and the provision of public services. The agreement has been heavily criticized for being more comprehensive than the Free Trade Agreement with the United States (CAFTA – DR), and for reducing the countries’ room for maneuver and control over their own finances and resources. So far, there have been no concrete examples of the positive or negative effect of the agreement for Nicaragua.

Positive climate action

Climate change reinforces Nicaragua’s vulnerability to natural disasters. Longer periods of drought and large amounts of rainfall threaten the production of basic foodstuffs. Programs directly aimed at small farmers reduce their vulnerability somewhat. Powerful fungal attacks on the coffee plants have led to a large drop in coffee production, which has particularly serious consequences for small coffee producers. Nicaragua has comprehensive strategies for clean energy and climate action, including forest conservation where they are linked to REDD + (Reduced Emissions from Deforestation and Forest Degradation). Measures to reduce deforestation have produced results. According to the Nicaraguan Forest Institute (INAFOR), the deforestation rate has been reduced by 9 percent from 2009 to 2013. At the same time, expanding cattle production and African palm plantations are putting strong pressure on forest reserves.


Costa Rica has for many years been the target of the many Nicaraguan people who emigrate in the hope of a better life. It is estimated that about half a million Nicaraguan people live in Costa Rica. In recent years, migration to the United States has increased, and the International Organization for Migration (IOM) estimates that there were approximately 350,000 Nicaraguan people in the United States in 2010. Money transfers from Nicaraguan residents living abroad constitute an important source of income for both families and the country. According to the Inter-American Development Bank (BID), the money transfers account for 12 percent of gross domestic product. For many, seasonal work in other neighboring countries such as El Salvador is also an important source of income.

Nicaragua has long been the exception in a region characterized by soaring killings, gang violence and drug-related violence. Although pressure from the largest gangs in the north of Central America (MS-13 and Barrio 18) is increasing, these gangs have not gained a proper foothold in Nicaragua. The Nicaraguan police’s focus on preventive work and dialogue with youth has been an important factor in curbing this pressure. The Atlantic coast is an important transit point for drug trafficking, but so far there have been few cases of settlement between various gangs or cartels.

Civil society

Since the revolution, Nicaragua has had a strong and important civil society. Civil society has played an important role in promoting issues such as women’s rights, gender equality, culture, trade unions and peasants’ rights, and was an important counterpart to the right-wing governments in the 1990s and 2000s. Historically, many have been associated with the FSLN, but several of the organizations and social movements have withdrawn from the party.

The women’s movement in particular has been critical of Ortega. This is due to both the allegations of abuses against his stepdaughter and changes in the abortion law that was passed after the 2006 election. The new abortion law imposes a total ban on all abortion, and is one of the most stringent laws in the region. The total ban on abortion is seen as a result of Ortega’s alliance with the Catholic Church. Although the government has passed laws that strengthen women’s access to and ownership of land, the relationship is characterized by strong distrust from both sides.

Today, the environmental movement in particular is noticing that the scope for influence is diminishing as their criticism of the planned channel and other parts of the government’s environmental policy increases. The scope of action for government-critical organizations is narrowed, and many organizations choose to keep a low profile.

Atlantic Coast – Towards Real Autonomy?

The two autonomous regions of the Atlantic coast make up almost half of the country’s territory. The regions have enormous biological diversity and large natural resources. A large proportion of the population of the Atlantic coast are indigenous or Afro-descent. When the two regions were granted autonomy in 1989, management of natural resources was still far below the central government in Managua. After a process of more than ten years, an important place has now been taken towards more real self-government. New boundaries have been measured and these will in practice be placed under the control of the newly created area governments. These area governments should be composed in the traditional way, and do not follow the usual municipal/regional structure. They must have full administrative rights over natural resources and on paper this will strengthen the rights of indigenous peoples and the Afro-farmers.

However, the challenges are in line. Area governments still lack the capacity to govern, and there is very little knowledge of the new law in the population. There is a great risk that the process whereby the regional governments themselves must assess which external players should continue their activities in the area or have to withdraw, is characterized by power struggles and corruption. In addition, increased pressure on fishery resources has led to an increasing number of alternative sources of income. It will be very challenging for the area governments to facilitate the conditions for sustainable development and management of natural resources.

International supporters

According to, both Venezuela and Cuba have been central allies for Ortega after taking over power in 2006. Nicaragua is a member of the ALBA trade cooperation, receiving huge sums of aid from Venezuela. The management of these aid funds through Albanisa, a state/private enterprise where key FSLN peaks have strong interests, have been heavily criticized. In recent years, Russia has become an increasingly important supporter of Nicaragua, in addition to China.

The need for new alliances is high after most European countries, including Norway, have withdrawn all or much of Nicaragua’s assistance. Norway’s long-term presence in the country was ended when the Norwegian embassy was closed down in 2012. Norway continues to maintain development cooperation with some local organizations. In addition, SAIH, the Development Fund, Norwegian People’s Aid and Save the Children collaborate with several local organizations. However, the future of Norwegian involvement in the country is very uncertain. A further reduction of the Norwegian presence and cooperation in the country will break down a historically important collaboration – where precisely Nicaragua and the Sandinist revolution played a hugely important role in building the Norwegian solidarity movement for Latin America.


Capital: Managua
Population: 5.97 Million (2016)
Life Expectancy: 73.2 Years (2016)
Infant Mortality: 19 Per 1000 (2016)
Religion: Catholicism 58.5%, Evangelism 21.6%, Other 4.2%
Official language: Spanish
GDP per capita (PPP): US $ 5,300 (2016)
Currency unit: Cordoba
Main export items: Coffee, beef, gold, sugar, peanuts, shellfish, tobacco, cigars, car belts, textiles, clothing, cotton.
Regional relations: Member of ALBA, CAFTA, CELAC and OAS