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Nicaragua?s economy is more stable than it was at this time last year, although the investment climate still trails behind much of Latin America, experts say.

In their annual review of economic risks facing Nicaragua, Luis Humberto Guzman and Nestor Avendano found that the business and political changes in the first quarter of 2007 caused only moderate instability to the country overall, a relaxation of several points from the months immediately following the elections.

The economists say the improvements have to do with the early vote of confidence that business groups gave the new government and the popular support for President Daniel Ortega, whose approval rating hovers around 60%. They calculate that the political and economic risks have leveled off since the elections, helping the country?s stability rating jump more than eight points in 2007 compared to the first quarter of 2006.

The higher marks were driven by a growing economy, modest government spending, and a slight drop in inflationary pressures over the last few months. Another factor, the economists say, is that the returning Sandinista leader is more adept at building alliances than his predecessor, Enrique Bolanos.

Despite the improved economic outlook, Nicaragua has a long way to go in attracting more investment, according to recent survey by the Latin Business Chronicle. The U.S.-based magazine ranked Nicaragua as the third-worst country in Latin America to conduct business in. Nicaragua, which is among the poorest in the region, has traditionally ranked badly in such surveys.

But the Latin Business Chronicle found several positive factors that bode well for the country?s future, namely its competitive business environment and strong integration with global markets. Nicaraguan exports continue to rise, and the amount of new businesses and commerce within the country has also jumped, pushed along by remittances and foreign aid. Tourism is also poised to grow further, the magazine found.

Contending that his economic program will create a new way forward for Nicaragua, Ortega said that he is unfazed by the country?s current low business ranking. ?I am not worried,? he told reporters after a May 15 meeting with a Guatemalan business group investing $20 million dollars in an energy plant. ?Because here we have a reality that investment will be arriving in Nicaragua independent of what they say in magazines.?

Your Latin America Insider,

Suzan Haskins
for International Living