the Republic of Nicaragua is an economically poor country. The employment rate of the country is very low. Coffee, corn, sugarcane, cotton, bananas, rice, sesame, soya, tobacco, beans etc are the agricultural products of the country. The fast growing industries are food processing industry, textiles industry, clothing, chemicals, machinery and metal products, petroleum refining industry, footwear industry, wood and so on. The materials that are exported to the foreign nations are primarily beef, shrimp, tobacco, coffee, lobster, gold, sugar, peanuts etc. The nations that are involved in this trade with Nicaragua are US, Mexico and El Salvador.
Nicaragua's economy is very active and has experienced great changes during the past decade. As the country is under-developed is perfect for investment particularly in the tourism and industrial sector. Nicaragua's government has been making exerting itself to improve the economic situation and remove growth barriers.
An overview
Nicaragua's economy was truly a phoenix emerging from the ashes. Inflation was at one stage sitting at over 10 000% but then evened out to 10%. Foreign investment has increased from nil to greater than US$ 10 million. The cause behind Nicaragua's past economic problems stemmed from the earthquake of 1972 as well as the rule of the Sandinista regime. Nicaragua's economic situation improved dramatically with the 1990 election of Violeta Chamorro and the establishment of a democracy. GDP (Gross Domestic Product) rates reached peak and foreign investment returned to make use of the country's commercial potential. The majority of potential growth lies in the agricultural sector, however, great potential also exists in the following sectors: energy generation, tourism, export manufacturing, mining and construction as well as the sale of consumer goods (e.g. Cars and computers). Due to this, Nicaragua was set to become the Americas' quickest growing country.
Nicaragua's economy was also boosted by the fact that it became a member of the CACM (Central American Common Market). As of 1999 a free-market has been set up in Central America which means no tariff restrictions, borders or barriers. Nicaragua is in a great geographic location to be extensively used.
Despite this expansive growth in Nicaragua's economy which took place after the new form of government came in, Nicaragua remains one of the poorest countries in the region and faces issues such as unemployment, low per capita income and great foreign debt. In recent years, the annual growth on Nicaragua's GDP has been very low. As of 2005 the GDP growth rate was at 4 percent and the inflation rate on consumer prices was at 9.6%. At the beginning of 2004 Nicaragua received a US$ 4 billion reduction in foreign debt by means of assistance by the Heavily Indebted Poor Countries program. Nicaragua's debt, however, still remains high. By putting certain agreements into action, Nicaragua's economy could once again improve in the future.
Economy phenomena’s
The Nicaraguan economy has seen no "business as usual" for almost twenty years. From the mid-1940s to the mid-1970s, high rates of growth and investment changed Nicaragua's economy from a traditional agrarian economy dependent on one crop to one with a diversified agricultural sector and a nascent manufacturing component. Beginning in the late 1970s, however, more than a decade and a half of civil war, coupled with a decade of populist economic policies, severely disrupted the Nicaraguan economy. Extraordinary expenses to support the constant fighting, with its incalculable burden upon the population, the environment, and the country's infrastructure, rendered most economic indicators largely meaningless. Add several catastrophic natural disasters-- an earthquake in 1972, a hurricane in 1988, and a drought in 1989--and five years of a total trade embargo by the United States to the effects of the fighting, and it becomes clear why Nicaragua in 1993 vied with Haiti and Guyana as the poorest country in the Western Hemisphere.
Finding solutions to address the human costs of Nicaragua's wars is the economic challenge facing the government of President Violeta Barrios de Chamorro (1990- ). Those human costs are numerous: the diversion of resources from social programs to the military, loss of agricultural and industrial production, increased misery and widespread hunger, destruction of natural resources and infrastructure, the uprooting of families and communities, and demands for land and resources from internal and returning external refugees. Getting Nicaragua's national economy in order may be the easier part of the challenge. Controlling inflation, adjusting exchange rates, and setting new agricultural and industrial prices and priorities are only first steps. The government faces the even larger problems of endemic poverty and widening environmental deterioration.
The relative optimism of 1990, stemming from the February 1990 election of a politically moderate president and the reconciliation of most armed conflict soon after, seemed to offer a rare opportunity for Nicaragua to build almost from scratch a better future. However, continued political problems and natural disasters in 1991 and 1992 dimmed that initial optimism. The goal of revitalizing Nicaragua's economy in an era of fragile democracy and increasingly scarce resources remained the country's greatest problem in 1993.
Since the colonial period, Nicaragua’s economy has been based on the export of raw materials, largely agricultural products. Coffee has been a major crop since the 1840s, and cotton, sugar, bananas, forestry, mining, cattle, and shrimp have also contributed to the economy.
Beginning in the 1970s, Nicaragua suffered a series of devastating events that led to an economic crisis. The country was severely damaged by civil conflicts, including the anti-Somoza revolution and then the contra war of the 1980s, at the same time it suffered natural disasters including earthquakes, floods, and hurricanes. Between 1981 and 1990 gross domestic product (GDP) per capita declined by 33.5 percent.
Nicaragua’s economy has recovered somewhat since 1994, but it remains severely depressed. In 2002 Nicaragua’s GDP was $4 billion, equivalent to $750 per person, making Nicaragua one of the poorest countries in the Western Hemisphere.