Nicaragua is the poorest country in Central America and the second poorest in the Western Hemisphere, with widespread poverty (42.9% below the poverty line in 2009) and an estimated unemployment rate of 7.2% (2013).
Inflation was at an estimated 7.4% in 2013, although GDP grew by an estimated 4.2%, largely due to an increase in demand for Nicaraguan exports and increased consumer spending at home.
The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) has been in effect since April 2006 and has improved export opportunities for many agricultural and manufactured goods. Close to one-third of GDP is derived from agriculture, timber and fishing, and livestock and dairy production has been growing steadily. Export products, especially coffee and gold, have benefited from the recent rise in international commodity prices. Around two-thirds of Nicaragua’s exports are to the US.
Struggling with a high public debt, Nicaragua has relied on a Poverty Reduction and Growth Facility (PRGF) with the International Monetary Fund (IMF). The most recent programme ended in 2011 and they are currently in negotiations for a new programme. It also depends heavily on foreign aid and remittances from Nicaraguans living in the US, Costa Rica and elsewhere, which reached over US$1 billion in 2012. Foreign direct investment is also on the rise.