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Three months after the beginning of the citizens' demonstrations in Nicaragua, which triggered deadly violence, the country's economy suffers serious consequences due to the fall in investment, employment and production .
Economic activity (IMAE) corresponding to May, shows a decrease of 4.9% compared to the same month of 2017, according to the Central Bank of Nicaragua (NCB). The most negative sectors are tourism, commerce and construction.
"We must prevent this economic crisis from worsening and causing irreparable damage; The important thing is to use common sense, we must think of a solution that allows us to reactivate the economy, "said economist Mario Arana.
The Central Bank of Nicaragua ( BCN) projected at the beginning of the year that the country's growth would be between 4.5% and 5%, but with the crisis it now stands at 1%, while the Nicaraguan Foundation for Economic and Social Development (Funides) estimates that the economy could contract if the crisis continues.
Optimistic BCN
NCB President Ovidio Reyes said at a press conference Tuesday that May and June are the months when there will be the biggest reduction in economic activity, because of the riots that affected the
"But by July, we would expect a recovery . Then there will be two months of significant decline in economic activity: May and June, but one would expect that from July, restart or resume various sectors ", said the official.
"We always bet on the optimistic scenario and we believe that economic activity, which we had planned to grow by 1.0%, will be realized; On the job, the chairman of BCN said that 82,000 jobs were lost due to the crisis, and he also thinks that they could recover in the coming months, mainly in the US. agriculture and agriculture.
Negociation
The economist Mario Arana commented that it is likely that the political crisis will lead to the flight of free zone companies, and advocates a political negotiation to restore confidence in the economy. 39 economy and the economy. "We have to attract flows of foreign direct investment, deposits back to the financial system that have been reduced and have affected credit, we need that there is consumption, that people recover their jobs, we need an economic reactivation. ", Added.
"The trade sector is the one that has suffered the most, followed by tourism, the textile sector, construction, the country needs early solutions to this crisis that has already
Activity contracted
According to the NCB, animal activity decreased by 23.9% in May (-9.3% in January-May), due to lower slaughterings in vaccination, poultry and swine activities. and the decline in live cattle exports, mainly
The construction activity recorded a decrease of 14.5% (-10.1% in the accumulated from January to May). which showed decrease are: steel, ready-mix concrete, cement, quarry stone, wood, asphalt, blocks and paving stones, among others.
The institution specified that the activity decreased by 10.3% (0.3% accumulated in January-May), with decreases in wholesaling and wholesaling
"Hotel and restaurant services decreased by 35.9% (-3.7% cumulatively from January to May). In the behavior of this activity has influenced the lowest influx of visitors from abroad, "says the Central Bank in its report on economic activity released Tuesday.
Financial activity has declined 1.1% (4.4% in accumulated January-May), due to low deposits, with an increase in net credit deliveries.
"The loan was mainly aimed at the commercial sector. In deposits, the decline was mainly observed in the currency modality, "reported the NCB.
The Low Note
When the crisis reached two months, three international rating agencies downgraded Nicaragua's rating
Moody's Investors Service changed the outlook Nicaragua's rating from positive to stable, while Standar & Poor's (S & P) revised the country's economic outlook from stable to negative. Fitch Ratings also downgraded "B +" to "B", with a negative outlook, the default rating of the long-term issuer in Nicaragua's foreign currency.
The strong contraction projected by Funides would leave Nicaragua this year as penultimate. countries of the American continent in terms of economic growth, surpassing only Venezuela which is estimated to have a contraction of 15%.
In recent years, Nicaragua was the third fastest-growing economy, behind the Dominican Republic and Panama.
The situation of the financial system
The chairman of the NCB, Ovidio Reyes, pointed out that the national financial system, due to the decline in economic activity brought about by the riots.
He stated that the NCB, in coordination with the Superintendency of Ban Cos and other financial institutions (Siboif) and the Ministry of Finance, have devised policies to ensure the stability of key financial indicators.
"The Siboif has issued regulations for the restructuring of the loans of the affected persons, the NCB has carried out operations loans with the bank through monetary reports, also auctions of representatives.It should be noted that the NCB maintains the open liquidity window for all banks and further a line of financial assistance for those who may have limited access to the pension instrument, "he explained.
The official adds that the added liquidity in the financial system, it reaches 36%, "guaranteeing the liquidity necessary to operate the economic agents."
"Currently we have reserves of 2.568 million dollars, that is to say that we have made available our reserves so far Compared to December of the previous year, 189 million dollars, but at the exchange table, we managed to inject $ 291 million, that's what we sold from the Central Bank, "he said
. the last few weeks have slowed down the reduction in deposits, which was high at the beginning of the crisis, but has now stabilized.
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