Nicaragua-ECONOMY

Salient Features: Formerly mixed economy undergoing extensive market-oriented structural adjustment, mainly by means of privatization of state enterprises and downsizing of public sector. Restoration of economic stability and reconstruction after eight years of civil war major concerns. Production dominated by primary commodities, mainly agricultural, for export and domestic consumption. Small manufacturing sector produces mainly for domestic and regional markets. Debt and political instability hampering growth and preventing return of foreign capital in early 1990s, despite dramatic progress in reducing inflation since 1990. Economy heavily dependent on foreign aid.

Gross Domestic Product (GDP): US$1.6 billion in 1992 (US$425 per capita), one of lowest per capita figures in Western Hemisphere. Economy contracted sharply during late 1980s and stagnant since 1990, with real GDP growth at minus 0.5 percent in 1992. Slow recovery expected by mid-1990s.

Agriculture: Mainstay of economy, accounted for approximately 29 percent of GDP in 1989 and an estimated 24 percent in 1991; employs about 45 percent of work force. Production heavily oriented toward export of coffee and cotton, which generate about half of total export revenues; bananas, sugar, tobacco, sesame, rice, and beef also important export commodities. Domestic-use agriculture robust, but increasingly supplemented by food and basic grains imports. Approximately 80 percent of agricultural production controlled by private sector, following expropriation and redistribution of large landholdings during 1980s.

Industry: Small industrial sector producing for domestic and regional markets; experienced substantial growth during 1960s in response to tariff protection and intraregional trade expansion under Central American Common Market (CACM) but declined precipitously thereafter. Industrial production as share of GDP peaked at 23 percent in 1978, dropping to 19 percent by 1989. Agro-industries dominate, accounting for 75 percent of total industrial output; other domestic use industries include cement production, chemicals processing, metals processing, and petroleum refining. Industrial recovery impeded during early 1990s by outdated and inefficient equipment and production methods, fuel shortages, lack of spare parts, labor unrest, and lack of supporting infrastructure.

Minerals: Mining not significant economic activity; accounted for 0.6 percent of GDP in 1990. Gold, silver, and salt mining main sources of mineral income; known deposits of copper, lead, iron, antimony, tungsten, molybdenum, and phosphate remain unexploited. Mining sector, nationalized in 1979, remained under state control in 1993. Offshore oil and natural gas exploration being undertaken off Pacific and Caribbean coastlines.

Energy: Domestic energy needs met by petroleum imports, as well as by hydroelectric and geothermal electricity generation. Imported oil, mainly from Mexico and Venezuela, satisfies approximately half of domestic demand. One geothermal and one hydroelectric plant in operation; a second, 400-megawatt hydroelectric plant under construction. Electrification uneven, heavily concentrated in urban areas. National power grid damaged by civil war.

Foreign Trade: Exports valued at US$343 million in 1991, dominated by coffee, cotton, bananas, sugar, and beef. Imports valued at US$650 million in 1991, mainly petroleum and its byproducts, other raw materials, nondurable consumer goods, and machinery. Soviet Union, Eastern Europe, Cuba, the European Community (EC), and Latin America major trading partners during 1980s. Trade conducted mainly with EC, United States, Latin America, and Japan since 1990. Balance of trade characterized by sizable deficits since 1980.

Balance of Payments: Total debt estimated at US$10.6 billion in 1990. Experienced highest per capita debt in Latin America because of chronic fiscal and current account deficits during 1980s, resulting in approximately US$4 billion owed to former Soviet Union and approximately US$6 billion owed to Western nations and multilateral lending institutions. Granted substantial debt relief beginning in 1990.

Foreign Aid: Most economic assistance provided by United States, EC, and multilateral agencies since 1990. Major recipient of aid from socialist countries during 1980s.

Currency and Exchange Rate: Gold córdoba (córdoba oro); US$1 = 6.55 gold córdobas in April 1994.

Fiscal Year: Calendar year.

Data as of December 1993