Nicaragua Suffers Worst Slump in 30 Years Amid Ortega Crackdown

(Bloomberg) -- Nicaragua is suffering its deepest slump since the 1980s as political violence and a government crackdown frighten off investors and tourists.

The poorest country in the Americas after Haiti will see its economy contract 4.1 percent this year, according to the Economic Commission for Latin America and the Caribbean, the most since 1988 when the government was at war with the U.S.-funded “Contra” rebels. The International Monetary Fund and Fitch Ratings both forecast a 4 percent contraction.

President Daniel Ortega’s government this month stripped legal status from several human rights groups and non-governmental organizations, raided the offices of the newspaper Confidencial and jailed the founder of news channel 100% Noticias. Some journalists have gone into hiding, while others have left the country.

“It’s an incredibly repressive situation in Nicaragua and the government is bent on silencing all voices of opposition,” said Eric L. Olson, D.C.-Central America director for the Seattle International Foundation. “It scares investors and it certainly scares tourists.”

‘Desperate Bid’

At the height of the the chaos, shops, restaurants and hotels shut their doors, while protesters barricaded highways, preventing goods from reaching the ports. The M3 measure of the money supply contracted 16 percent in November from a year earlier as people pulled deposits out of banks, according to the central bank.

Violent street protests erupted in April when Ortega’s government sought to raise social security contributions while slashing benefits. Even though the government swiftly ditched those plans, the demonstrators remained on the streets, demanding early elections. More than 300 people have been killed, according to the Inter-American Human Rights Commission.

U.S. President Donald Trump signed into law last week the Nicaraguan Investment and Conditionality Act which seeks to impose additional sanctions on government officials and condition multilateral loans to the Central American nation. Ortega and his wife, who is the vice president "continue to degrade their country’s institutions in a desperate bid to hold on to power," U.S. State Department deputy spokesman Robert J. Palladino said Dec. 13.

Protesters have attacked Ortega, now in his fourth five-year term, as a dictator, while he has responded by accusing the U.S. development agency USAID of financing coup attempts. Ortega, an ally of Venezuelan President Nicolas Maduro, last month said "Yankee interventionists" are seeking to "recolonize our people and re-enslave our nations."

To contact the reporter on this story: Michael McDonald in San Jose, Costa Rica at mmcdonald87@bloomberg.net

To contact the editors responsible for this story: Matthew Bristow at mbristow5@bloomberg.net, Robert Jameson

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