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LatinNews Regional Monitor: Caribbean & Central America - 25 November 2019

In brief: IMF expects Nicaragua’s GDP to shrink by 5.7%

* The International Monetary Fund (IMF) has forecast that Nicaragua’s GDP will contract by 5.7% in 2019. Following the conclusion of an IMF mission that visited Managua between 29 October-12 November in the context of an Article IV consultation, the IMF cites as causes of the economic contraction “social unrest in April 2018 and its aftermath”. More specifically its statement cites a “deterioration in confidence and international sanctions, which aggravated financial constraints and reduced investment, employment, and social indicators”. Real GDP fell by 3.8% in 2018 as “road blockades and impairments to infrastructure caused supply disruptions, while sharply weaker consumer and investor confidence resulted in bank deposit outflows and decreased private investment. The tourism, construction, and retail sectors were particularly affected”. The IMF projects that inflation will close 2019 at 6.4% (compared to 3.9% in 2018), which it says “reflects the transient effect of tax measures adopted earlier this year”.

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