Macroeconomic Forecast Nicaragua

Nicaragua's balance of payments appear to stabilizing going into 2012, as stronger than expected FDI flows have bolstered the financial account surplus to US$310mn in H111. However, we maintain our end 2011 forecast of a US$814mn current account deficit, due to imports outpacing steady export growth, which will likely result in a fall in the country's foreign reserves. Downside risks to Nicaragua's balance of payments stability stem from the potential for slower growth in regional trading partners, the U.S. and Venezuela, which could temper FDI and other investment inflows and dampen export growth moving into 2012.

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