Latin America Collection

Nicaragua has an agricultural-based economy, with recent
importance placed on textiles, the service sector and other small
industry.
In 2004, Nicaragua's exports reached a new high of $755.6-
million in apparel, bananas, coffee, gold, lobster, meats, peanuts,
sesame seeds, shrimp and sugar.
But tourism has become the country's number-one source of
foreign income in recent years, generating $170 million in 2004.
Nicaragua's Gross Domestic Product in terms of purchasing
power parity last year was $11.6 billion, with a 4.2% economic
growth rate in 2004, the highest in Central America. The GDP
is composed of three sectors: agriculture (29%), industry (25%)
and services (45%).
The inflation rate has dropped in recent years from double digits
in the late `90s, to 5.3% in 2004.
Nicaragua was also helped enormously last year when it was
granted $4.5 billion in debt relief (approximately 73% of the
country's total external debt) by the International Monetary
Fund (IMF) and the World Bank as part of the Heavily Indebted
Poor Countries (HIPC) Initiative. Several other countries have
also pardoned Nicaragua's bilateral debts in the last year.
Nicaragua's currency, the Córdoba, is set at a fixed depreciation
rate of 6% a year against the Dollar. At this book goes to press,
the exchange rate is 16.9 Córdobas to 1 U.S. dollar.


Unemployment in Nicaragua is over 40%, and the workforce is
1.5 million strong. Demographically, Nicaragua is a very young
country. Some 65% of the population is 25 years old or younger.
The Nicaraguan workweek is 48 hours, and Nicaragua has the
lowest labor costs in all of Central America, with a $.42/hour-
mimum wage and an average market wage of $.67/hour.
The Nicaraguan economy has also opened up to privatization in
recent years, privatizing its electric utilities, telecommunications
and insurance sector.
Overall, Nicaragua's economy is on the mend. And it only
promises to get stronger with its generous incentives for
investing in tourism or free-trade zones, and the Central
American Free-Trade Agreement (CAFTA) and Central
American Customs Union.
At press time, The Nicaraguan Tourism Institute (INTUR)
was in the process of redrafting its tourism incentive law (Law
306), with the intention of making it the most aggressive
incentive law in all of Latin America.