...Institutional and economic profile Flexibility and performance profile The COVID-19 pandemic presents a new hit on Nicaragua's economy, which was already damaged by weak business confidence. We expect GDP growth to remain lackluster in 2021 given political uncertainty related to the November general elections. + We now expect growth to stagnate in 2021 and to slowly accelerate in 2021-2023, partly reflecting the legacy of minimal investment and contraction in credit since 2018. + In our view, political risks remain high ahead of the election next year and continue to weigh on economic performance. + International sanctions pose risks for accessing external financing over the medium term. Fiscal support from the government to mitigate the COVID-19 impact has been modest but will not prevent a deterioration of the fiscal balance. + We expect Nicaragua's fiscal deficit will rise to 2.8% of GDP in 2020 as the country faces diminishing revenue and spending pressures. + Import compression, continued...
