LatinNews Daily - 23 November 2023

* The International Monetary Fund (IMF) has revised up its growth forecast for Nicaragua’s economy, to 4% in 2023, up from 3% in January. In a statement released following the conclusion of an Article IV visit to Nicaragua, the IMF highlighted how growth is being driven by a surge in remittances, which are projected to reach about 28% of GDP at end-2023, double their end-2021 level, driven by the rapid increase of Nicaraguan emigrants. According to the IMF, the record-high remittances, coupled with sustained exports, “are supporting a turnaround in the current account balance to a surplus of about 4% of GDP in 2023”. It adds that these foreign exchange inflows and sustained foreign direct investment (FDI), alongside “prudent macroeconomic policies, contributed to a rapid accumulation of gross international reserves to US$5bn by end-October (or about 6 months of imports, excluding maquila)”. However the IMF highlights that medium-term growth forecasts remain at 3.5%. This is below historical averages (2000-2017) of 3.9%, “given the cautious recovery in investment, limited approved new official financing, [and lower] labour contribution to growth due to recent emigration”. The report also highlighted economic risks posed by Nicaragua’s “high exposure and economic dependence on climate sensitive sectors”, as well as the possibility of “stricter and wider international sanctions” in response to concerns over the worsening state of democracy and human rights under the government led by President Daniel Ortega.