Political crisis to hinder Nicaragua economic recovery

Significance

However, the prospects of a sustained recovery are clouded by fiscal weakness, a precarious balance-of-payments position, a deteriorating business environment and the threat of international sanctions on the financial sector. The country's most vulnerable communities are yet to recover from the damage wrought by Hurricanes Eta and Iota.

Impacts

• An accommodative monetary policy will be maintained in an effort to support economic recovery.
• Ortega’s control over the judiciary will heighten legal uncertainty and erode the ability of investors to enforce contracts.
• The prolonged depreciation of the Cordoba will increase servicing costs of public and private dollar-denominated debts.
• Refugee outflows will intensify after November’s elections, with knock-on effects for the rest of the region.