Nicaragua's economy is projected to grow by approximately 4% this year, in line with its 2023 expansion, driven by sound macroeconomic policies and substantial remittances, as per a report by the International Monetary Fund released on Friday.
In 2023, the Central American economy experienced a 4.6% growth.
However, the IMF report anticipates a moderation in economic growth to around 3.5% in the medium term, attributed to potentially diminishing remittances from Nicaragua's significant migrant community, primarily based in the United States. Remittances account for over a quarter of the country's GDP.
The IMF highlights additional factors impacting growth, such as reduced private sector investments, a declining domestic workforce due to increased emigration, and potential challenges linked to political developments and the rule of law which may elevate business costs.
President Daniel Ortega's government is facing increasing international isolation amid concerns raised by rights organizations and the United Nations regarding a consolidation of power, strict limitations on freedom of expression, and recent far-reaching constitutional reforms.
Critics view Ortega's regime as tightening its control through punitive measures against dissent, including arbitrary detentions and violent crackdowns on opposition, notably since the installment of Rosario Murillo as co-president alongside Ortega.
The IMF's report stresses the imperative need to "significantly improve" the rule of law, safeguard the independence of the judiciary, tackle fiscal vulnerabilities, including pension system reforms, enhance transparency, and bolster oversight of state-owned enterprises.