Nicaragua's economy laid low by months of unrest

Managua (AFP) –


Tourist spots are empty, shopping centers and hotels are shuttered, loans for farming have dried up, and unemployment is accelerating. Such is the economic impact of months of unrest in Nicaragua -- despite President Daniel Ortega's insistence the situation is returning to "normality."

The country has been in turmoil since the 72-year-old leader, a former guerrilla who has ruled Nicaragua for 22 out of the past 39 years, responded to rising anti-government protests with a brutal crackdown by his security forces and loyal paramilitaries.

The government says 197 people have been killed since the protests first flared in mid-April. But rights groups say the death toll is actually over 300, and that 2,000 people have been wounded and more than 130 opposition figures detained.

Another casualty has been the Nicaraguan economy, once projected to grow at a sizzling 4.9 percent rate, now virtually dead in the water with growth expected to plunge to one percent this year.

"There is a desire among our own citizens to see things get back to normal. The coup has been really rough and the losses enormous," said Ortega, who refers to the protests as an attempted coup.

"It will take time to recover. But with this Nicaraguan spirit we are sure we will advance rapidly," he said, speaking last week.

Despite his guerrilla past, Ortega has long cultivated the private sector, promising stability and adherence to International Monetary Fund standards in return for investment.

That pact, however, has been blown apart by the unrest, with the business sector abandoning Ortega as the body count has climbed.

To soften the blow, the government is hoping to revive tourism, in recent years one of Nicaragua's fastest growing industries. The Nicaraguan Tourism Institute says it is planning a national and international campaign to lure visitors back.

- Tourism hit -

"I'm not seeing any 'normality'," said a European owner of a coastal hotel in Nicaragua who declined to be identified for fear of reprisals.

"This beach is empty. You can't see any tourists. I don't know how it can continue like this," he said.

In his small hotel, which can accommodate 35 guests, "there are days when there are just two people staying, or five, or none."

The owner said he had invested $1.5 million in his establishment. But where he once had a staff of 15 only three are now working.

International airlines have also drastically pared back flights to Nicaragua because of the sudden drop in tourists, according to the High Council for Private Business.

"Really, no one knows what is going to happen," said Ivan, a Frenchman who had invested $5 million in a hotel in another tourist hotspot and who declined to give his last name.

"When the protests started I thought they wouldn't last very long and everything would return to normal. But now, I have no idea," he said.

The head of the National Chamber for Tourism, Lucy Valenti, admitted that "tourist activity in the country is in crisis."

She said there was no sign of it reviving "because political instability and repression are continuing."

That's bad news for Nicaragua, which has looked to tourism as one of its fastest-growing sectors in the past decade. Before the unrest, more than one million visitors arrived each year.

In June, the number of passenger arrivals by air slumped 60 percent from a year earlier. Losses to the tourism sector since mid-April are estimated at $238 million.

Retail activity has also taken a hit, shrinking 2.5 percent in 2018 as shops have shut and sales plummeted. The sector has accumulated losses of $1 billion and some 45,000 jobs, according to Nicaragua's Chamber of Commerce.

- A lost year -

An economic consulting firm, COPADES, estimates that Nicaragua's economy will shrink as a result of the political crisis.

"The economy has shrunk ... There are no prospects for an early exit from the crisis. An enormous lack of confidence prevails and I don't see any way out because there is no political will to resolve it," said COPADES' director Nestor Avendano.

Even if Ortega did cave in and order early elections in mid-2019, as the opposition demands, "that could bring about economic growth but less than the economy's potential," he said.

Ortega was last re-elected in 2016 and the next polls are due at the end of 2021.

Although he maintains he is open to dialogue with the opposition, Ortega has repeatedly dismissed demands for snap elections to decide the country's political leadership.

The president, who is in his third presidential term since returning to power in 2007, has said early elections would invite "anarchy."

The head of Nicaragua's Producers and Exporters Association, Mario Arana, said Ortega was "erratic" in his policies.

"He wants to sell himself to the world as an element of stability, but he is part of the problem, not the solution," he said.