Nicaragua

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile Remittances and foreign direct investment are driving economic growth, although it remains hindered by relatively frail institutions Government is committed to macroeconomic stability, with low fiscal deficits and a favorable debt profile --Extraordinarily high growth in remittances is boosting domestic consumption and economic growth, compensating for weaker demand from the country's trading partners. --Nicaragua?s fiscal deficits will remain low and debt levels steady as the government continues to prioritize sound macroeconomic policies. --We expect decent GDP growth of 3.5% annually in the next three years, although below the country?s historical growth rate of about 5%. --Strong dollar inflows, mainly from remittances, are reducing

...We expect long-term economic growth to remain below historical levels, despite relatively good foreign direct investment. Although Nicaragua's (B/Stable/B) economy is recovering from a recent series of external and domestic shocks, we expect that investor sentiment will continue to depend on the quality of institutions and the perception of doing business in the country. We expect remittances to gradually fall to normal levels but remain a key buffer against external shocks. Extraordinary growth in remittances is boosting domestic consumption and providing a cushion against potential external shocks. The government will remain committed to prudent fiscal and debt measures, prioritizing the country's macroeconomic stability. Low fiscal deficits will allow government debt to stabilize at about 40% of GDP--mostly concessional lending at low interest rates....

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