Nicaragua’s Economy Loses Steam as FDI Slows

Nicaragua’s economy is showing signs of stagnation as most foreign investment comes from companies already operating in the country rather than from new investors, according to the latest report by the Economic Commission for Latin America and the Caribbean (ECLAC).

The country attracted US$1.5 billion in foreign direct investment (FDI) in 2025. However, 63% of that amount came from reinvested profits, meaning foreign companies chose to keep earnings in Nicaragua instead of launching new projects. Local media outlet Artículo 66 said this reflects weak inflows of fresh investment.

Nicaragua ranked behind Guatemala, which attracted US$1.88 billion in FDI, and far behind regional leader Costa Rica, which received US$5.59 billion, driven by technology and advanced manufacturing investments. Nicaragua attracted more investment than Honduras (US$1.4 billion), Panama (US$938 million) and El Salvador (US$764 million).

Despite the slowdown in new investment, foreign companies remain an important source of jobs. ECLAC said Nicaragua generated six jobs for every US$1 million in foreign investment, the highest rate in Central America and above the regional average of 4.7 jobs. The figure reflects the country’s dependence on labor-intensive industries.

ECLAC also warned that Nicaragua remains heavily dependent on the United States as an export market. More than half (52.9%) of the country’s exports go to the U.S., equal to 22.4% of its gross domestic product, making the economy vulnerable to changes in U.S. trade and economic policies.