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NICARAGUA
FINANCE
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A stable and reliable system
INDUSTRY AND SERVICES
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Potencial to Develop
EDUCATION
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Investing in people
TOURISM
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An undiscovered treasure
BOOMING COUNTRY, FULL OF OPPORTUNITIES
Photography: Intur
Nicaragua has become one of Latin America’s most attractive investment destinations in recent years. The country benefits from high-levels of public security, low levels of crime and theft, a stable fiscal framework, a strategic location, high quality of life, and preferential access to important markets all over the world. In addition, it is one of the fastest growing economies in Latin America, and an economic leader in its region, second only to Panama for GDP growth in Central America. According to the Central American Bank for Economic Integration, over the past five years, the country has averaged 5.3% GDP growth, placing it ahead of both its Central American neighbors, which grew at an average of 3.6%, and the Latin America and Caribbean
number of countries that had investment in Nicaragua doubled from 34 to 68. Also according to ProNicaragua, the five biggest sources of FDI into Nicaragua in 2016 were Panama (22%), the United States (13%), Mexico (12%), Spain (9%), and China (9%), altogether accounting for around 65% of FDI into the country. One of the biggest advantages of doing business in Nicaragua is safety and security. The country has been internationally recognized as one of the safest in the Western Hemisphere. In 2017, the homicide rate was just 7 per 100,000 inhabitants, the lowest rate in Central America and the second-lowest in all of Latin America according to the Commission of Police Chiefs and Directors of Central America, Mexico, the Caribbean, and Colombia. In addition to citizen security, the country benefits from high levels of business security. According to the World Economic Forum’s Global Competitiveness Index,
region as a whole, which grew at an average of just 1.2% over the same period. In 2017, the country grew 4.9%, and the World Bank estimates that it will see 4.4% growth in 2018, making it the third-fastest growing country in Latin America, behind Panama and the Dominican Republic. The institution also expects to see that growth rate maintained through 2020. As a result of its fast-growing economy,
which ranks the challenges to doing business in different countries, Nicaragua has one of the best scores in the Western Hemisphere for ‘Crime and Theft as a Major Problem for Doing Business’, an indicator from 1-20 which measures the extent to which executives consider crime a challenge for doing business. Nicaragua has a score of 1, ahead of Costa Rica with 1.4, Mexico with 12.9, and El Salvador with 19.5.
The country’s growth has been constant in recent years safety, and stability, Nicaragua has seen a steady growth in FDI in recent years. In fact, according to ProNicaragua, FDI has grown by an average of 10% per year over the past decade, reaching US $1.46 billion in 2017. The destinations for FDI into Nicaragua are fairly diverse sectorally. According to ProNicaragua, the sectors receiving the most FDI in 2017 were the industrial sector, which received almost half (45%) of all FDI, the financial sector with 15%, the commerce and services sector with 13%, the telecommunications sector with 10%, and the mining sector with 8%. Nicaragua ARTE Sitio WEB.pdf 1 11/04/18 has also seen increasing diversification in its sources of FDI. From 2007 to 2017 the
Nicaragua has also seen strong export growth, benefitting from its strategic location and wide network of preferential trade agreements. According to the Central Bank of Nicaragua, from 2008 to 2017, exports grew by an average of 7% per year, reaching USD $5.2 billion in 2017, up from $4.84 billion in 2016, and nearly double the $2.75 billion exported in 2008. The largest Nicaraguan exports are textiles and apparel, automotive harnesses, coffee, bovine meat, gold, cigars and tobacco, dairy products, sugar, peanuts, and beans. The United States is Nicaragua’s largest trade 09:45 partner, accounting for more than half of exports, and 37% of all international trade.
OFFICIAL NAME: Republic of Nicaragua TOTAL POPULATION: 130,373.4 km CAPITAL: Managua LANGUAGES: Spanish TIME ZONE: UTC/GMT-6
US $13.813 billion REAL GDP GROWTH: 4.9% GDP:
INCOMING FDI: US $1.442 billion POPULATION: 6.3 million CURRENCY:
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In 2016, the commercial exchange between the countries was worth US $4.2 billion. Other major trade partners are Mexico, the European Union, Venezuela, and Central America. One of Nicaragua’s strengths, particularly for its export-oriented industries, is its strategic location right in the heart of the Americas. Nicaragua has easy access to both North and South America by boat and plane. From Miami, Managua is just over a two-hour flight or six days by boat. This has made it an attractive destination for companies looking to position themselves with access to some of the largest markets in the world. Nicaragua also benefits from preferential access to markets all over the world through a range of trade agreements. Nicaragua is a WTO member, a member of the Central American Common Market, a signatory of CAFTA-DR (the Central American Free Trade
In recent years, Nicaragua has aimed its public policy and macroeconomic policy towards promoting economic and social development by generating an attractive environment for private investment. An important element of this has been establishing a public-private dialogue system focused on creating jobs and fostering economic growth. Through this system, there is a tripartite dialogue between the government, unions, and private companies to ensure that policymaking benefits all segments of the economy. Nicaragua has been internationally recognized as one of the freest economies in the world. The 2016 Economic Freedom of the World Report by the Fraser Institute ranks Nicaragua in 45th place out of 159 countries for economic freedom. One of the major attractions for international companies looking to enter
Its geographic location, stability, and security have been key factores for the country’s development Agreement) and holds trade agreements with the European Union, Mexico, the Dominican Republic, the United States, Chile, Panama, and Taiwan. Additionally, it benefits from preferential export access to markets in a number of developed countries around the world through the Generalized System of Preferences (GSP), including Canada, Norway, Russia, and Japan. Nicaragua’s use of trade agreements such as CAFTA-DR has allowed it to expand its light manufacturing and textiles and apparel industries and take advantage of its agricultural strength to expand agricultural exports to North America and Europe. Nicaragua also benefits from a number of bilateral investment promotion treaties aimed at encouraging investment by setting standards for legal protection of investments. In addition to the abovementioned countries, Nicaragua holds bilateral investment treaties with Taiwan, Spain, Denmark, Germany, the UK, Chile, France, Argentina, Switzerland, Sweden, Korea, the Netherlands, the Czech Republic, Italy, and Russia.
Nicaragua is its robust system of free zones. According to figures from the Central Bank, exports from free zones have grown 177% over the past decade, and the free trade zone economy is expected to grow at 4.9% in 2018, faster than overall GDP. In addition, the country has a generous regime of fiscal incentives for foreign investors, particularly for export-oriented businesses, such as tax exemptions and tax credits which are even available for foreign investors who do not physically locate their businesses in free trade zones. Although free zones have long been centers for Nicaragua’s textile and apparel industry, in recent years they have also begun to attract increased investment from the business process outsourcing and call center industries, which see them as an excellent way to access the country’s highquality human capital. Currently the country is experiencing a delicate situation that we trust with be resolved soon. However, for all the reasons previously mentioned, the country is expected to come out of this situation even stronger as it has done in the past.
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Publisher: IGM INVESTMENTS. Latin American Director: Margarita Fernández, Project Director: Ximena Gonzales, Producer of Special Reports: Petra Barna, Text: Tyler Mattiace. Acknowledgements: Rosario Gonzales, Gloria Berríos, La Prensa, CADIN, AMCHAM. IGM IMVESTMENTS INDEPENDENT SUPPLEMENT FOR MIAMI HERALD www.igminvestments.com
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IGM INVESTMENTS INDEPENDENT SUPPLEMENT FOR MIAMI HERALD
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IGM INVESTMENTS INDEPENDENT SUPPLEMENT FOR MIAMI HERALD
ADVERTISING SUPPLEMENT
IGM INVESTMENTS INDEPENDENT SUPPLEMENT FOR MIAMI HERALD