Macroeconomic Forecast Nicaragua

BMI View: We are revising down our end-2010 consumer price inflation (CPI) forecast to 5.0%, from 6.5% previously, as we do not expect price pressures to build significantly in H210. CPI came in at 3.82% y-o-y in June, a moderate slowdown from May's 3.83% reading, and while domestic bottle necks and still-strong money supply growth (M1 rose by 20.4% y-o-y in May) imply prices will continue rising by year-end, we believe a weaker external environment is likely to keep prices pressures capped until year-end and well into 2011.

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