Nicaragua’s economy up 30% under Sandinistas

Independent economist says growth is still insufficient to reduce poverty in Nicaragua

Nicaragua’s economy has grown 30% since the Sandinistas returned to power in 2006, according to new numbers published yesterday by the Central Bank.

Though Nicaragua’s economy remains the smallest in Central America, it is making up ground on its neighbors thanks to the government’s economic policies and social programs, according to Central Bank President Alberto Guevara.

“The model of economic and social development promoted by Comandante Daniel Ortega Saavedra is working and has the powerful virtue of incorporating people and their own economic initiatives,” Guevara said.

According to Central Bank, Nicaragua’s Gross Domestic Product (GPD) per capita has grown from $1,239 to $1,582 just in the past year. While that is a notable improvement, it’s not enough to move Nicaragua out of last place in Central America.

 Indeed, even with that growth, Nicaragua’s average GDP per capita is still less than half of the Central American average and only about one-sixth of Costa Rica’s GDP per capita ($8,876), according to the International Monetary Fund estimates.

Insufficient Growth

Néstor Avendaño (photo/ Tim Rogers)

Independent economist Néstor Avendaño says Nicaragua’s estimated 4.1% economic expansion projected for this year is still insufficient to reduce poverty.

“Nicaragua is growing at a good rate, but it is insufficient because we are still very far from the 8% or 9% growth we need to really start to reduce poverty in Nicaragua,” the economist says.

Avendaño says economic growth under the Sandinista government has been based mostly on private investment and exports, which have doubled just in the past three years. But 2013 could be a belt-tightening year, he warns.

Avendaño says Nicaragua’s economy next year will most likely experience decelerated growth (around 3.1%) and accelerated inflation, due to pending tax reforms that are scheduled to happen in the first semester of 2013.

 “I don’t see any possibilities of us getting above 4% growth next year,” the economist says.

ALBA Bonanza

Not everyone will feel the pinch. According to opposition congressman Carlos Langrand, of the National Assembly’s Economic Commission, the ALBA business group funded by Venezuelan oil imports and controlled by President Daniel Ortega’s inner circle is doing better than ever.

“From 2007-2011, Venezuelan oil imports by Nicaragua totaled $3.7 billion, 50% of which, or $1.86 billion, is used by ALBA for Nicaragua,” the lawmaker told The Nicaragua Dispatch.

That means that the various ALBA businesses have nearly $1.9 billion at their disposal—money the opposition has tried to get the government to include in the national budget.

The Need to Create Employment

While the administration spends its Venezuelan oil money how it sees fit, Avendaño argues that the Sandinistas’ poverty reduction efforts is not money well spent.

For instance, he says, the government’s “Christian, Socialist and Solidarity” cash bonus handout to state workers every month is costing the government $59 million a year, but has not resulted in any increase in production or a single new job.

“If that money were used to generate public works instead of increasing the consumption of public employees, it would create jobs and reduce poverty,” the economist asserts. “Plus, if the aid from Chávez disappears, how are we going to even pay for that bonus?”

The government argues that the cash bonuses are helping Nicaraguan families meet the rising cost of living.

Nicaragua’s biggest economic challenge, Avendaño says, is unemployment.

“Unemployment is our biggest problem and it is one that has not been improved; it is stagnate, and that is serious problem,” the economist said.

Avendaño says 25% of Nicaraguans who are economically active are not able to find jobs to generate an income. Creating jobs should be the focus of the government’s poverty reduction strategy, which has not been made public, the economist says.

“As long as unemployment remains the same, poverty increases because the unemployed continue to have more children,” Avendaño says.

 

  • http://playaroca.com PRD

    With electricity bills not including the debt subsidies from ALBA, WHICH IS A LOAN, being nearly .37 US a KWH, and cell phone costs upward to .47 per minute, how can anyone get a head? Add food price increases and with unemployment so low I can easily see poverty and the average persons life style not being reflective of these nice looking figures shown above. I see a similarity of the 99% supporting the 1% syndrome and the average person getting less.
    Solar energy is being squashed as an alternative because of the conflict of interest between Oil and profits.

  • El Macho Raton Rivense

    1- Inflation up 9%,
    2 -0Highest kw per hour in latin america,
    3 -highest liter of gasoline in the region,
    4- education and health budget 4th consecutive year cut
    5 – real wages, especially in the public sector for teachers, cops, etc has shrunken not gone up… most of the wage increase has been in the BPO sector
    6 – exports have gone up in dollar terms, but lowered in volume
    7 – the average basic food basket for the average family has increased 23% since Ortega power (it now stands at around 500 dollars a month, far above the 150 dollars average monthly wage)
    8 – economic marginalization on party lines for the average Joe is killing Nicaragua
    9 – Unemployment remains above 10%, underemployment remains hovering around 65%
    10 – less children are being educated, less teachers are qualified

    ….. where is the growth??? GDP measure economic activity not development…. the HDI does that, in which case, we have been stagnate since Ortega took over

    1990 HDI stood at 0.47 and increased to 0.58 in 2006…. from 2006 to 2012 HDI went from 0.574 to 0.589… pretty much remained flat… where is the growth going to?? Danny’s pockets and his new orteguista oligarchic class based on corruption, authoritarianism, narco trade, black markets, etc

    • El Macho Raton Rivense

      *correction: in 1990 HDI stood at 0.37

      *UNDP

  • Abu Sharif

    El Ratón tiene razón. This “30% up” has no value at all without seeing the circumstances, from which unsustainable activities it is coming from, and what they are doing and especially what they are not doing with the m oney from their “growth”. Shouting out loud “Nicaragua does well, it grew by 30%” is just doing the business of gthe party’s propaganda department. Why is Nicaragua interesting for investment? No strkes, social conflicts are nearly forbidden to happen, no consideration of the environment laws, free transfer of capital and profits made here. And they call this “socialism” … Funny!

  • roberto

    El Macho Raton is saying the truth. In my observation , the only “few” that are doing better than the rest are the ones that are close in power with Ortega.. Like Daniel Ortega and his Family and Roberto Rivas and his family. Those are the only few :)

  • Nospam Sonny

    Sandinazis and their fascist cohorts are doing just fine. And what is that picture in the article? Are we supposed to believe that prosperity has only arrived when Nicaragua has been turned into a carbon copy of the US patented disaster of suburbia ???

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