Country Presentation May 2016 OUR SERVICES Information about - PowerPoint PPT Presentation

Country Presentation ● May 2016

OUR SERVICES • Information about • Identification of options • Facilitate and expedite Nicaragua and business for locations for real government procedures opportunities • Support in facilitating the estate • Customized information • Legal advice exporting process • Directory of suppliers of • Information about packages • Organization of site visits: related goods and business opportunities in meetings with companies services the Caribbean Coast and institutions • Support and facilitation through our regional • Support with information office PRONiCaribe on the structure of operational costs and fiscal charges Assessment and Implementation of Aftercare decision making the project PRONicaragua is the Official Investment Promotion Agency of the Government of Nicaragua.

COUNTRY PROFILE Capital Managua Area 130,373.4 km 2 Official Language Spanish Population 6.2 million Currency Córdoba Exchange Rate (2016 Average) C$28.62 = US$1.00 Time Zone UTC/GMT – 6 hours Región Central / Central Region Región Pacífico/ Pacific Region Región Caribe/ Caribbean Region Source: Central Bank of Nicaragua.

STRATEGIC LOCATION

ECONOMIC PERSPECTIVE Gross Domestic Product US$12.69 billion (4.9% growth vs 2014) GDP per capita US$2,027 Exports US$4.89 billion FDI Inflows US$1.22 billion* Gross International Reserves US$2.49 billion (2.35 times the monetary base) Inflation 3.05% Devaluation of Currency 5% annual vs. US Dollar Sources: Central Bank of Nicaragua, Ministry of Development, Industry and PRONicaragua. *Estimates Data

ECONOMIC GROWTH Gross Domestic Product 14.00 12.69 Real GDP Growth (%) 11.81 2011 2012 2013 2014 2015 12.00 10.85 10.46 6.2 5.1 4.5 4.7 4.9 9.76 10.00 8.74 8.49 8.38 7.46 8.00 Billion US$ 6.79 6.00 4.00 2.00 0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Min Zhu, Deputy Managing Director of the IMF, described Nicaragua´ s economic growth as “excellent” as it has outperformed Latin America´s average growth rate of 1.2% and Central America´s 2.2%. Source: Central Bank of Nicaragua.

GDP GROWTH IN THE REGION HONDURAS GDP 2015: 3.6% GUATEMALA Average of 5 years: 3.5% GDP 2015: 4.1% Average of 5 years: 3.8% NICARAGUA EL SALVADOR GDP 2015: 4.9% GDP 2015: 2.6% Average of 5 years: 5.1 Average of 5 years: 2.1% PANAMA GDP 2015: 6.0% COSTA RICA Average of 5 years: 8.4% GDP 2015: 3.5% Average of 5 years: 4.0% Source: Central Bank of Nicaragua and IMF.

ECONOMIC STABILITY Nicaragua maintains positive relations with different multilateral organizations such as the International Monetary fund (IMF), World Bank (WB), the Inter-American Development Bank (IDB), and the Central American Bank for Economic Integration (BCIE) • On July 2015, Moody´s announced an improvement in the credit rating of Nicaragua, going from B3 to B2 . • On December 2015: Fitch Ratings assigned B+ for the first time to Nicaragua with steady perspective. • On February 2016: Standard & Poor's assigned B+ for credit ratings, local and foreign currency. The perspective of the qualification is long term steady. “ ¨ The macroeconomic policies implemented by the Government of Nicaragua are positive, and should serve as an example for Latin America” Min Zhu, Deputy Managing Director of the IMF

EVOLUTION OF FOREIGN DIRECT INVESTMENT 18% compound annual growth rate 1.60 1.45 1.39 1.40 1.28 1.22 1.20 0.97 1.00 Billion US$ 0.80 0.63 0.60 0.51 0.43 0.38 0.40 0.28 0.20 0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* According to preliminary statistics from 2015, the sectors that registered more FDI inflows were: telecommunications, industry, and commerce and services. Source: Central Bank of Nicaragua, Ministry of Development, Industry and Trade and PRONIcaragua.*Estimated data

EVOLUTION OF EXPORTS 14% compound annual growth rate 6.00 5.14 4.90 4.82 4.74 5.00 4.36 4.00 3.45 Billion US$ 2.74 3.00 2.62 2.33 1.99 2.00 1.00 0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 For 2015, total exports reached US$4.90 billion. The main export destinations were: the United States, Central America, Mexico, the European Union and Venezuela. Source: Central Bank of Nicaragua.

MAIN EXPORT PRODUCTS 2015 Main Export Products (% of total value) Textile and Apparel (26.8%) Cigars and Tobacco (4.5%) Automotive Harnesses (11.7%) Dairy Products (4.0%) Bovine Meat (9.4%) Sugar (3.2%) Coffee (8.6%) Shrimps (3.1%) Gold (6.5%) Peanuts (2.1%) Source: Ministry of Development, Industry and Trade (MIFIC, for its acronym in Spanish)

AN IDEAL EXPORT PLATFORM Access to 1.5 billion of people Free Trade Agreement Preferential Access Agreement Solidarity Union Agreements Central American Common Market Agreements under Negotiation Source: Ministry of Development, Industry and Trade (MIFIC, for its acronym in Spanish)

MARKET ACCESS Nicaragua constantly seeks to increase its access to the world’s most important markets in order to consolidate itself as the ideal export platform. Agreements Countries United States, Mexico, Panama, Taiwan, Dominican Free Trade Agreements Republic, Chile & European Union Nicaragua, Guatemala, El Salvador, Honduras & Costa Rica. Central American Common Market Additionally, free movement of capital, services and human resources among CA-4 countries. Generalized System of Preferences Japan, Norway, Canada, Russia and Switzerland. Venezuela, Ecuador, Bolivia, Cuba, Antigua & Barbuda, ALBA agreement Dominica, and St. Vicente and the Grenadines South Korea, Canada, Peru, Bolivia. Agreements under Negotiation ALADI (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela y Cuba) Source: Ministry of Development, Industry and Trade (MIFIC, for its acronym in Spanish)

SAFETY INDICATORS Homicide Rate in Central America Crime and Theft as a Main Problem to do Business in (per every 100,000 inhabitants) the Americas 2015 El Salvador 24.3 2014 2015 Guatemala 20.2 120 101 Honduras 17.0 100 Jamaica 16.0 69 80 66 Mexico 13.3 57 60 Dominican Republic 7.3 35 31 Mean L.A: 28.5 Venezuela 40 7.2 16 11 11 10 Peru 6.8 20 8 8 Panama 5.4 0 Colombia 4.7 Nicaragua Costa Rica Panama Guatemala Honduras El Salvador Haiti 4.5 Paraguay 4.2 Chile 3.0 Argentina 2.0 Costa Rica 1.8 Uruguay 1.1 Bolivia 1.1 United States 1.1 Nicaragua 0.6 Brazil 0.4 Canada 0.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Source: Global Competitive Index, Commission of Police Chiefs and Directors of Central America , Mexico , the Caribbean and Colombia

LABOR FORCE Formal Employment 900 773 800 710 674 700 624 Thousand of employees 578 600 535 504 493 459 500 420 400 300 200 100 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Demographic Indicators Population under 39 years old 76.1% Unemployment* 6.7% Labor Force* 3.2 million Underemployment 46% Source: Central Bank of Nicaragua. *2014 third quarter estimated data

2016 MINIMUM WAGE Salaries include social benefits (48.5%) Sector Monthly in US$ Hourly in US$ Construction, Financial Establishments and Insurance 386.8 1.85 Electricity, Gas and Water, Commerce, Restaurants and Hotels, 317.0 1.52 Transport, Warehouse and Communications Mines and Quarry 310.4 1.49 Fishing 262.8 1.26 Free Zones Regime Industry 242.4 1.16 Community, Social, Domestic and Personal Services 242.3 1.16 Manufacturing Industry 232.4 1.11 Central and Municipal Government 215.5 1.03 Micro and Small Craft Industry and National Tourism 186.6 0.89 Agricultural* 172.8 0.83 Source: Ministry of Labor of Nicaragua (MITRAB, for its acronym in Spanish). *Does not include food. Average Exchange rate for 2016: C$28.62 = US$1

MODEL OF DIALOGUE AND CONSENSUS The Government of Nicaragua, the private sector and workers coordinate efforts and design strategies to: 1. Promote economic development 2. Generate new decent jobs 3. Reduce poverty Governmental entity chaired by the President with government and private sector representatives, to follow up on agreements and promote better working relationships. The model of dialogue and Signing of tripartite More than 100 laws passed consensus has been agreement between by consensus with the included in the article 101 of government, private sector Superior Council of the the Political Constitution of and union leaders to fix Private Enterprise (COSEP). Nicaragua. minimum wage increases and social responsibility strategies in the long term.

DEVELOPING THE ENERGY SECTOR Since 2007, the Government of Nicaragua set out to: Increase generation capacity, Expand coverage, and Go green, as part of its key development strategies of the country. 2007 2015 2020 10% 26% 50% 50% 74% 90% Installed Capacity: 819 MW Installed Capacity: 1,346 MW Expected Capacity: 1, 666 MW Thermal Renevable Energy Installed capacity has increased 64% since 2007. Coverage has reached 85% of the national territory. Source: Nicaraguan Energy Institute (INE, for its acronym in Spanish).