Industry Trend Analysis - Growing Downside Risk To Construction Forecast - SEPT 2017
BMI View: Increasing international pressure on Nicaragua over the legitimacy of its democratic institutions presents a growing risk to our positive outlook for the country's construction industry growth prospects .
We note growing downside risk to our outlook for Nicaragua's construction industry from the potential that the United States and European Union could restrict or halt aid flows to the country in response to rising concerns about the deterioration of Nicaragua's democratic institutions. As a result of doubts about the legitimacy of Nicaragua's presidential election in November 2016, we have seen increasing international pressure on the Nicaraguan government to implement reforms to improve democracy in the country. The election, which delivered a landslide victory to incumbent Daniel Ortega, saw leading opposition candidates disqualified from running, and international election monitors were not allowed to oversee the vote.
At present, our positive outlook for Nicaragua's construction industry is premised on strong support from multilateral institutions and international partners including the United States and the European Union for the development of infrastructure projects ( see ' Multilateral Investment To Drive Construction Growth ' , 22 May). Most major projects currently underway in the country are supported by development assistance with the World Bank, European Investment Bank (EIB), Inter-American Development Bank (IDB), and the governments of Japan, Canada, and South Korea all playing important roles. Supported by this strong international involvement, we currently expect Nicaragua's construction industry to see annual average real growth of 4.1% over our ten-year forecast period.
|Positive Outlook Faces Growing Threat|
|Nicaragua - Construction Industry Forecasts|
|e/f = BMI estimate/forecast. Source: Banco Central de Nicaragua, BMI|