The small Nicaraguan economy has been historically based on agriculture. Since pre-Columbian times it is worth mentioning that important indigenous groups such as Mayans and Aztecs had a flourishing trade with Nicaraguan natives through agricultural produce such as cocoa, beans, corn, vegetables and others. During the Spanish dominion the “cocoa bean” was the most important export item to Europe until coffee surpassed it at the end of the XIX century.
It is important to mention that the Nicaraguan economy during the XX century mainly depended on domestic and foreign political policies. During the government of the Somoza family, which ruled for 43 years, the economy relied upon the export of coffee, bananas, gold and cotton in the 1960’s and 1970’s. The economy was solid and Nicaragua had strong commercial relationship with Central America as well as the United States, but political participation was limited and social dislikes started uprising among Nicaraguans with the outcome of a left wing oriented revolution in 1979. The Sandinistas nationalized all private companies and implemented a state-run economy with the intervention of the government in every decision. War burst between the right wing guerrillas group “the Contras” and the “Sandinistas” weakening the economy of the country for the next coming years.
After 10 years of outrageous struggle, peace was signed from both antagonist political factions and a new coalition government was voted in power. So in the 1990’s the economy moved forward to a free-market economy and integrated into globalization. The new elected authorities opted to work along with the World Bank and International Monetary Fund in order to bring fresh money into Nicaragua’s impoverished economy. These two international organizations mainly dictated the economic policies for the next coming years, making significant evaluations in privatization, fiscal reforms, budgets and approval, etc.
In the last years there has been a more important presence and impact on the local Nicaraguan economy from the European Union and other donor countries which have been supporting many developing projects on both rural and urban areas.
Nicaragua’s Gross Domestic Product had substantial growth, increasing from US$6.3 billion in 2008 to US$10.5 billion in 2012. Per capita income has also showed a reserved increase, rising from US$1,123 in 2008 to US$1,756 in 2012. According to official numbers from the Central Bank of Nicaragua, inflation for at the end of 2013 was 6.6%. At the end of Nicaragua’s war strife, external public debt was unbelievably huge for this small and impoverished country, reaching the sum of US$13 billion. In the last twenty years of peace Nicaragua has been able to negotiate with its creditor countries this debt. Today Nicaragua’s external public debt has been considerably reduced to US$2.1 billion. Nicaragua’s public investment has increased substantially benefitting primarily infrastructure and social and national services sectors.
For 2012 unemployment rate was calculated around 7.4%. Nicaragua spends 5.3% of its Gross Domestic Product on Public Education investing approximately US$203 per student, while on public health care its expenditure lowers to 3.7 % of the GDP. Foreign remittances play a significant role in Nicaragua’s slow-growing economy, Nicaraguan people who live and work mainly in the United States, Costa Rica and also in some European countries remitted approximately US$1 billion in 2012.
Nicaragua’s primary activities are agriculture, cattle, silviculture and fishing. Within the manufacturing activities manufacturing itself, construction, mines and quarries are mentioned; as tertiary activities commerce, central government, transportation, communications, financial services, electricity, gas, water, social and personal services. The foreign direct investment has gone from US$626 million in 2008 to US$1.2 billion in 2012. Most of this foreign invested money has gone to energy, communications and manufacturing.
Nicaragua’s main exports are coffee, meat, peanuts, cattle, sugarcane, gold, lobster, dairy products, shrimp, beans, bananas, sesame seeds, and others. In the last years, non-traditional products such as handmade furniture, hammocks, and the national rum, “Flor de Caña”, have become popular exports. Two of our national beers (Toña & Premium) are also exported. Also Nicaragua signed an important free trade agreement in 2004 with Central America, the United States and Dominican Republic in order to facilitate and trade in dynamic procedures among these nations. Nicaragua’s main commercial partner is Central America, second is the United States, third is constituted by different European countries, then other Latin American countries.
Tourism has also become a meaningful source of economic development for Nicaragua. It is receiving more and more support from both the government and private investment and at the same time it has been placed as the first most important source of income since the year 2002. According to the Nicaraguan Institute of Tourism, visitors’ arrivals for 2012 were estimated about 1.1 million and the country has the capacity of 7,500 hotel rooms. Central Americans are the main tourist visitors in Nicaragua, followed by North Americans, then Europeans and afterwards the rest of the world.
Banks open from 08:30 am until 04:30 pm without closing at midday. Visa, MasterCard, American Express and Diner’s Club are widely accepted at major hotels, restaurants, and larger stores. It's possible to receive cash advances from major credit cards in ATM’s in Managua and the other larger cities of the country.
The Euro has been introduced into the bank institutions since January 2002. Euro banknotes are now accepted by the two main bank institutions. Change from Euro to Cordobas is available (but still in relatively small quantity) at counters of the largest bank institutions. It is also possible to open a bank account in the new European currency (Euro) in the biggest bank institutions of Nicaragua to receive bank transfers. Euros are exchanged against our local currency (Cordoba) and are quoted daily. As per Jan 2014, you receive around 33 Córdobas (C$) for one Euro (EUR).