Nicaragua: 2025 Article IV Consultation-Press Release; and Staff Report

The Nicaraguan economy weathered well multiple shocks since 2018, supported by appropriate macroeconomic and financial policies, substantial pre-2018 buffers (gross international reserves and central government deposits), and financing from international financial institutions (IFIs) during the pandemic. Real GDP growth was further sustained recently by favorable terms of trade and high remittances growth, averaging 3.9 percent over 2022-25H1. The economy is operating under targeted international sanctions, geopolitical reorientation of official foreign inflows, and transfers of private property to the state since 2022. Strong fundamentals—low inflation, a declining public debt-to-GDP ratio, twin fiscal and external surpluses, well-capitalized banks, and sizeable buffers—should help Nicaragua withstand headwinds from ongoing shifts in the global policy landscape.