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Latin America Investment News on Viva Tropical

Warning! Road Blocks Ahead: Experts Say Nicaragua Needs to Reevaluate its Course

Article Summary:

If not cautious, Nicaragua’s economic achievements will be derailed if it does not adopt a four-fold policy, says experts, which involve an atmosphere of industrialization, strengthen its quality of education, become trustworthy and make significant improves in its infrastructure. These four aspects are essential to productivity in the workforce, as in the land, capital goods and technology, because productivity will lead to economic growth, they add.

Photo Credit: La Prensa Nicaragua

Original Article Text From La Prensa Nicaragua via Google Translate :

The keys to growth
On the eve of a new presidential term, economists reiterated the warning that while not adopted a policy of industrialization, doubling the growth of the economy, the country will lag and will have to continue to see development as a goal impossible to achieve.

The application of sectoral support policies is seen as a prerequisite for guide for the removal obstacles that may prevent them achieving their goals.

In the past two years, the economy achieved a growth of 4.5 percent. However, during the five years 2007-2011 the average growth was only 2.68 percent. According to economists, to reduce poverty and begin to dream of the development requires the economy to grow more than six percent annually.

“To approach a seven percent growth can do several things, but the bottom line is education. But quality education, education not merely quantitative. That is, not that it will expand the number of students, no, no. But the quality so we can say that our education is able to compete with education in other countries that are successful or are under development, “says economist Rene Vallecillo.

The expert says that another aspect is the institutional imperative. “Many times it is a forgone issue, but it is a sign that a country is serious, respecting the legal rules (that) no rule of law and therefore no legal security for investments.”

Add a third requirement would improve infrastructure, because without this “can not be productive. That is, we can not lower production costs to compete with the rest of Central America and the world. ”

“It is essential to productivity in the workforce, as in the land, capital goods and technology, because all that productivity is going to lead to economic growth of at least seven or eight percent,” emphasizes Vallecillo.

Economist José Luis Medal recognizes that despite the “mediocre” growth achieved during the administration of President Daniel Ortega concludes, progress was made in the fight against poverty, but these are still insufficient, “because even 42 percent of the population lives on less than two dollars a day. ”

Medal and Vallecillo warned that these “achievements” can not be sustainable until they reach an economic growth that supports the welfare policies in the long term and programs to move from assistance to self-sustainability programs.

“It is more sustainable in formal employment and create you a productive worker, who give her a sheet of zinc, because zinc sheet will solve the immediate problem, but does not guarantee permanent subsistence employment does,” said Vallecillo.

Medal adds another variable that prevents further growth of the economy is the decline in real wages, caused by high inflation rates in recent years.

Reports from the Central Bank, the national average real wages grew in 2006 to 1671.3 Cordoba, but in 2011 fell to 1464.2 córdobas.

The president of the Chamber of Mines of Nicaragua (Caminic), Sergio Rios, believes that “the best policy to encourage mining is economic stability, social and clear rules.” The mining sector was the economy that grew last year, with 46 percent from 2010.

He believes that “because we have been enjoying this stability is that it has made the investment. Currently in the world there is much interest in mining, and a country in which there is stability and clear rules becomes an investment destination. ”

For Rivers, the “follow and support the mining sector by the Government has been quite positive.Activation was achieved by the Commission of Energy and Mines, resulting in an institutional space with the regulator to address issues of concern to the growth and development of the sector. ”

The goal for 2012 is mining to increase by 15 to 20 percent of production in relation to 2011, which was 185,621.93 troy ounces of gold and silver troy ounces 227,790.70.

As for the metal sector (sand, aggregates, stone quarries, limestone, gypsum and tuff), Rivers notes that “has recovered significantly” and hope to “meet the infrastructure construction projects, housing, energy projects and roads programs for 2012. ”

Meanwhile, the construction sector, which reached a 15.7 percent growth in 2011, ranking as the second highest growth in 2012 expected to maintain similar growth.

Mario Zelaya, president of the Nicaraguan Chamber of Construction, said that through public investment, which plans to build schools and hospitals in different cities, and private investment, especially in the energy sector and social projects financed Venezuela’s cooperation, the industry can maintain and even exceed their levels of growth this year.

Meanwhile, Solon Guerrero, president of the Federation of Livestock of Nicaragua (FAGANIC), confident that in the next five years will remain “the same characteristics of economic and political stability” for the livestock sector to achieve its expansion goals .

The livestock sector is ranked as the third fastest growing in the past year, reaching 11 percent more than in 2010.
“If the world price of commodities does not drop, and national political and economic stability of the country (below) to how you are right now, you can produce without fear that we will have a war or a coup, we can achieve in 2012 the same growth last year … Because strikes, riots, burning tires, scare any investor, even nationals, “recalls Guerrero.

Exports endangered
The economist Rene Vallecillo European fears that the crisis affecting the U.S. economy, and as this is the main market for Nicaraguan exports, causing a deadlock in them.

Believes that Nicaragua has an advantage because it produces raw materials, not manufactured goods. But still, afraid affectations in the consumption of the products the country exports.

“That will have two effects will be less demand and also a fall in international prices of our products, or at least a stalemate, which will prevent exports continue to grow at a pace that grew during 2011,” Vallecillo warned.
For his part, economist José Luis Medal also warns about the possible effects of a crisis, Nicaragua does not have “a lot of leeway” because they created the counter-cyclical fiscal fund since 2006 recommended some agencies like the Economic Commission for Latin America and the Caribbean (ECLAC).

“However, the recession of 2009 affected us relatively little for several reasons: because our banks did not ever put the problems of U.S. banks, or are involved in the game of European banks either.On the other hand, we export raw material that is not immediately suffering a recession, because people stop buying new cars but no coffee, no sugar, bananas and is still not eating meat. That does not mean we will not be impacted via trade or via remittances, “said Medal.

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From La Prensa Nicargua

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