Nearshore Americas

Thanks to Political Tension, Nicaragua Suffers a Sharp Fall in Foreign Investment

Foreign direct investment (FDI) in Nicaragua shrank more than 53% in 2018 compared to the previous year, largely due to the socio-political tension triggered by a harsh crackdown on student protestors in the country.

According to data released by the Economic Commission for Latin America and the Caribbean (ECLAC), Nicaragua received barely U$359 million in FDI during the year.

The only regional countries that performed worse than Nicaragua in terms of foreign investment are Venezuela and Bolivia. Considering the report, foreign inflows decreased by more than US$350 million dollars.

Though the fierce street battles have now ended, Nicaragua is still in political limbo. Analysts say the Central American country may take many years to recover the economic loss it suffered during the unrest.

The government needs to make peace with the opposition and allow other political party leaders to participate in the governance, say economists.

Mexico, Spain and the United States have long been the major investors in Nicaragua. For many Americans, the Central American country was one of the favorite tourist destinations. As the country slid into a political turmoil, foreign tourists stayed away.

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The sharpest contraction of all was in the manufacturing sector, where FDI plunged from inflows of US$324 million in 2017 to an outflow of US$ 19 million in 2018. FDI in telecommunications also dropped off steeply (-48%), while investment in the energy and mining sectors was nil.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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