Nicaraguans, like other diasporas, engage with their home country in economic ways. Sending remittances, consuming home country goods, or donating for philanthropic activities. 

Remittances to the country have been growing constantly, year over year.

We also observe increases in the percentage of the GDP they represent, since 2015.  Despite the alleged economic growth sustained by agriculture, reliance on remittances has been relatively constant and increasing.  These flows are better understood in terms of the fact that the country receives at least 650,000 person to person transfers thus representing one third of households in Nicaragua.

In 2020 remittances grew over 7%.  The growth of remittances is explained by both migration and increases in the amount remitted.  For example, in another study of remittance recipients in Nicaragua, we found that 10% of Nicaraguans said their amount received had changed since the crisis, and they were receiving $240 a month on average. This compares with the $220 reported among those who said their amounts had not changed. However, they were also receiving more frequently to the point that the 10% who say the amount they received following the crisis had changed are receiving US$3900 annually compared to the US$2760 the other 90% received.[1]

This growth of remittances to Nicaragua is significant given the fact that the inflows of migrants caring for their relatives has been the country’s only positive macroeconomic indicator as the economy has continued to decline because of the political crisis.  As of 2020, remittances came to carry 15% of the country’s GDP, up from 9% in 2017.

Source: World Bank data, 2018; Nicaragua Central Bank; and author’s estimates.

 

During the pandemic, Nicaraguans have dealt with sending money relative to the effect of the crisis in their host country.  According to data published by Nicaragua’s Central Bank, growth in incoming remittances for 2020 is driven by both higher remittance transfers and increases in transactions. For example, transfers from the United States transfers have increased to 16%. Spain has seen relevant increases on overall remittances received in Nicaragua largely a result of many Nicaraguans recently arriving to that country.  Meanwhile, the average remittance sent decreased from Costa Rica as this country has struggled between balancing quarantine and economic recession.

The United States, Costa Rica, Spain and Panama account for over 90% of remittances received.

Source: Nicaraguan Central Bank

 

The United States, Costa Rica, Spain and Panama account for over 90% of remittances received.

Source: Nicaraguan Central Bank

 

Economic impact of remittances

It is important to understand that these flows have a distributive impact in the country because it arrives to more than 650,000 households, that is 37% of all households in Nicaragua. Less than forty percent of these flows goes to Managua, the capital. However, it goes to all neighborhoods in the social strata, from Bello Horizonte, Bolonia, to Los Robles and las Colinas. 

Similarly, 10% of flows go to the Caribbean coast of the country.  Overall, income dependence on remittances to these households is 50%. Nicaraguan remittance recipients have a better quality of life as a result of these flows.

 Edad, Genero e Ingreso Familiar en 2020

Perfil sociodemográfico

Valor

% mujeres participantes

66%

Edad promedio (años)

33

Tamaño de hogar promedio

4

Ingreso promedio anual de la persona asesorada (C$, sin incluir remesas)

105,949

Ingreso promedio anual del hogar (C$, sin incluir remesas)

125,225

Ingreso total con remesas (C$)

225,022

El ingreso familiar durante 2020…

 

Ha aumentado

2%

Ha disminuido

9%

Se mantiene

64%

No dio información

26%

In addition to have a significant impact on households, the aggregate volume of remittances has been critically important to sustain the damage caused by the political crisis on the economy.  Family remittances have been the sole macroeconomic indicator that has remained positive during this period between 2018 and 2020.  The Nicaraguan economy is largely dependent on the external sector.  Half of its income originates from exports, tourism and family remittances. Therefore with the loss of exports and tourism, remittances have provided important foreign exchange to compensate for the drops.

 

2017

2018

2019

2020

Tendencia

2020

Tendencia

2021

2021

Exportaciones

3,305

3301

3366

3206

-5%

10%

3527

Turismo

841

544

515

181

-65%

30%

235

Remesas

1,301

1501

1682

1800

7%

5%

1890

Sector externo

5,447

5346

5563

5187

-7%

9%

5652

Como % del PIB

39.5

41

44.4

44

 

 

 

Remesas – PIB (%)

9

11

13

15

 

 

 

PIB (US$,000,000)

13,786

13,064

12,535

11,850

-5%

4%

12312

Sector interno

61%

59%

56%

56%

 

 

 

 

 

 

 

Ingreso per cápita annual (US$)

2,159

2,022

1,915

1,789

1,850

Ingreso pér capita mensual (C$)

5578

 

5,426

5,217

5,800

Ingreso de hogares, economía informal (C$)

7,500

 

 

6,500

 7,250

Ingreso del estado (% PIB)

19%

18%

20%

18%

19%

Gasto del estado (% PIB)

20%

21%

20%

23%

24%

 

Transnationalism – including remittances, nostalgic trade and tourism – has a very important impact on Nicaragua’s economy. Its diaspora contributes more to the economy than remitting.  They consume home country goods, increasing the demand of agricultural commodities, and their visits to the country represent 15% of total tourism revenue.

Table 4: Estimated impact of Transnationalism on Nicaragua’s GDP (US$) 2018

Nicaraguans

Remittances

Nostalgic trade

Tourism

Nicaraguans in the U.S.

705,600,000

  273,118,003

  28,449,792

Nicaraguans in Costa Rica

 252,000,000

  276,369,408

  30,227,904

Nicaraguans elsewhere

 302,400,000

    92,123,136

    9,596,160

Migrants remitting (US$)

         1,260,000,000

  643,546,867

        68,273,856

Other person to person transfers

            140,000,000

   

As share of GDP

10.6%

5%

0.5%

Source: Author’s estimates

[1] Data on remittance recipients collected among people receiving remittances at Airpak facilities, December and January 2020.