Defying global economic odds, Nicaragua has remained a bright spot in an otherwise mixed scenario for Central America’s economies.
The country, once besieged by political turmoil and still vulnerable to natural hazards, has been growing on average with Latin America over the past decade. Disciplined macroeconomic policies since 2001 combined with a steady expansion of exports and FDI helped Nicaragua to weather recent global economic turbulence of the 2008-09 crisis, rising food and oil prices.
After a quick rebound in 2010, economic activity grew at 5.4% in 2011, the highest rate in a decade. Inflation was also tamed to single digits–around 8% in 2011, down from a high of 25% in mid-2008. The macro economy remains stable, with a GDP forecast growth of 4.2% in 2014, and foreign direct investment and trade show an improved outlook.
Nicaragua’s economic turnaround has allowed the country’s decision makers to shift from crisis control mode to longer-term, pioneering strategies to fight poverty, particularly in remote rural communities. Massive debt relief by the International Development Association (IDA), the World Bank’s unit for the poor, has helped to make this shift possible.
Nicaragua is still one of Latin America’s least developed countries. Poverty, although declining steadily in recent years, remains high. And more than 80% of Nicaragua’s poor live in the rural areas; many in remote communities where the access to basic services is still a daily challenge.
To better reach the country’s vulnerable families, IDA projects leverage local initiatives that stretch limited resources further and deliver sustainable results. Examples of these include Casas Maternas, using NGOs and local volunteers to provide pre- and post-natal health care to expecting mothers, and the Módulos Comunitarios de Adoquines to build rural roads using local manpower.
To this end, Nicaragua’s National Plan for Human Development (PNDH) 2007-12, is being updated through 2016. Its overarching goal is to reduce inequality by increasing poverty- reduction spending and boosting investment in social sectors and rural infrastructure