Nicaragua is the second poorest country in the Western Hemisphere with a 2022 GDP per capita of approximately $2,300.  The United States is Nicaragua’s largest trading partner, the source of roughly one-third of Nicaraguan imports and the destination for approximately two-thirds of Nicaraguan exports.  Nicaragua’s economy continues to suffer from an ongoing political crisis.  The crisis began following President Daniel Ortega and Vice President Rosario Murillo’s violent repression of peaceful demonstrations in April 2018 and deepened in 2021 as the regime jailed political opponents and private sector leaders, shuttered independent civil society organizations, and oversaw a rigged presidential election.  The regime’s authoritarian crackdown has undermined Nicaragua’s democracy, reduced consumer purchasing power, and eroded investor confidence.

Rising inflation exacerbates economic hardship in Nicaragua that (along with the regime’s intensifying repression) drives record Nicaraguan migration to the United States.  Nicaragua faces some of the highest food prices and the most expensive energy costs in Latin America.  In July 2023, the price of Nicaragua’s basket of goods and services – a key measure of inflation’s impact on the general population – rose to a record high of $530 per month, more than double the minimum wage of $210.  Remittances in 2022 from the rising ranks of Nicaraguan migrants in the United States reached $2.5 billion, 44 percent higher than previous year– or 16 percent of Nicaragua’s GDP – preventing thousands of vulnerable families from falling further into poverty.  

The Nicaraguan government has since 2019 pursued a fiscal policy designed to generate short-term budget funding instead of long-term growth.  The Nicaraguan government has aggressively increased taxes, even on basic goods.  Measures passed in 2019 taxed previously exempt items in the basket of goods.  An estimated 70 percent of basic household items are now taxed, including many food items. The 30 percent of products that remain exempt now face higher costs because their inputs are taxed. 

In 2022, Nicaragua’s economy grew 3.8 percent, driven by remittances from the Nicaraguan diaspora in the United States, increased consumer spending, exports, and financing from international financial institutions.  Official and independent estimates predict GDP growth will slow to 3 percent in 2023 as a demand for exports weakens amid slowing global demand.  Formal employment recovered slightly in 2022 but has not returned to 2018 pre-crisis levels with some 130,000 fewer formal sector jobs than in 2018. 

The Nicaraguan government’s repression of political opponents and the private sector, and systematic erosion of the rule of law, have created obstacles that make it challenging to do business in Nicaragua. The international community has applied a range of sanctions on individuals and entities linked to human rights abuses and corruption.  For more information on sanctions and sanctioned individuals, see the U.S. Department of Treasury’s summary of Nicaragua-related sanctions and the Global Magnitsky Designations for Nicaragua.  Businesses should exercise extreme caution when dealing with Nicaraguan entities to ensure compliance with applicable sanctions. 

Political Environment

For background information on the political and economic environment of Nicaragua, please visit the U.S. Department of State’s Countries & Areas website for Nicaragua.