Nicaragua remains the second-poorest nation in the hemisphere. Unemployment is officially around 12.2%, and another 35.4% are underemployed. Nicaragua suffers from persistent trade and budget deficits and a high debt-service burden; foreign assistance, including donations and debt relief, totals 42% of GDP in 2004.

One of the key engines of economic growth has been production for export. Exports were $755 million in 2004. Although traditional products such as coffee, meat, and sugar continued to lead the list of Nicaraguan exports, the fastest growth is now in nontraditional exports: maquila goods (apparel); gold; seafood; and new agricultural products such as peanuts, sesame, melons, and onions. Nicaragua also depends heavily on remittances from Nicaraguans living abroad.

Nicaragua is primarily an agricultural country, but construction, mining, fisheries, and general commerce also have been expanding during the last few years. Foreign private capital inflows topped $300 million in 1999 but, due to economic and political uncertainty fell to less than $100 million in 2001. This trend has been reversed to a degree during the government of President BolaÒos. Foreign direct investment reached 250 million in 2004.

Rapid expansion of the tourist industry has made it the nation's third-largest source of foreign exchange. Some 60,000 Americans visit Nicaragua yearly--primarily business people, tourists, and those visiting relatives. An estimated 5,300 U.S. citizens reside in the country. The U.S. Embassy's consular section provides a full range of consular services--from passport replacement and veteran's assistance to prison visitation and repatriation assistance.

Nicaragua faces a number of challenges in stimulating rapid economic growth. Long-term success at attracting investment, creating jobs, and reducing poverty depend on its ability to comply with an International Monetary Fund (IMF) program, resolve the thousands of Sandinista-era property confiscation cases, and open its economy to foreign trade. This process was boosted in late 2000 when Nicaragua reached the decision point under the Heavily Indebted Poor Countries (HIPC) debt relief initiative. However, HIPC benefits will be delayed because Nicaragua subsequently fell "off track" from its IMF program. The country also has been grappling with a string of bank failures that began in August 2000. The macroeconomic policies implemented by the BolaÒos administration helped the economy grow by 5.1% in 2004. Fiscal deficits have been reduced through increased tax collection and consolidated public sector expenditures. International reserves have increased from US$274 million in 2001 to US$ 670 million in 2004. The IMFís Poverty Reduction and Growth Facility (PRGF) was suspended because a political stalemate between the executive and legislative branches prevented Nicaragua from meeting program preconditions.

The United States is the country's largest trading partner by far--the source in 2004 of roughly 25% of Nicaragua's imports and the destination in 2004 of about 35% of its exports. About 25 wholly or partly owned subsidiaries of U.S. companies operate in Nicaragua. The largest of those investments are in the energy, communications, manufacturing, fisheries, and shrimp farming sectors. Good opportunities exist for further investments in those same sectors, as well as in tourism, mining, franchising, and the distribution of imported consumer, manufacturing, and agricultural goods.

The U.S. Embassy's economic and commercial section advances American economic and business interests by briefing U.S. firms on opportunities and stumbling blocks to trade and investment in Nicaragua; encouraging key Nicaraguan decision-makers to work with American firms; helping to resolve problems that affect U.S. commercial interests; and working to change local economic and trade ground rules in order to afford U.S. firms a level playing field on which to compete. U.S. businesses may access key Embassy economic reports via the mission's Internet home page at http://usembassy.state.gov/managua/wwwhemba.html .