Optimism prevails in the Construction sector of Nicaragua
The Central Bank of Nicaragua published recently the Private Construction Report corresponding to the third trimester of 2017. Said period registered a reduction of 10.2% in comparison with the same period of the previous year and a reduction of 2.9% in annual average.
There are four construction destinations that forms the private construction: residential, commerce, service, and industrial edification, being the last one the most affected, followed by the residential constructions. Said affection was occurred in Managua, as well as in the rest of the country. In the case of the service and commerce constructions, there was an increase in Managua, but not for the rest of the cities.
It is important to mention that at the moment of doing the evaluation a difference was done between the edifications in stages of new and completed works, that were the ones that suffered reductions and at the same time counterbalanced by the constructions in process and restart. Within the category of completed constructions there are three categories: developers, individuals and projects, where the three suffered reductions. Taking into consideration the geographic area, Managua had a reduction of 22.4% and the rest of the cities a reduction of 27.6%. Regarding the category of initiated construction, all the economic destination, except for the industrial works, suffered a reduction. At national level Managua suffered a reduction of the 25.2% and the rest of the country 6.1%.
Another fact that was analyzed in the Central Bank Report is the Construction Materials Price Index (IPMC by its acronyms in Spanish), which had a variation of 1.6% regarding 2016. According to the report there was an increase regarding to cement and derivatives, electricity, illumination and metals and derivatives. Regarding wood, sanitary ceilings and floors there was a reduction. The increase in the price of cement and its derivatives is because there was an increase in the prices of tiles, stone ball, brick, cement, sand and blocks. In the case of electricity and illumination, the increase was mainly in the price of electric wire, and for metals, the variation was because of the price increase in zinc nails and steel.
Despite that the numbers presented by the Central Bank of Nicaragua, shows that the construction sector, which is one of the key indicators to measure the economic activity of the country, demonstrates a deceleration, the main actors of this sector are being optimistic that 2018 will be a better year for the industry. Likewise, while it is true that there was a reduction in the private construction, the public infrastructure works that were done, such as the baseball stadium “Denis Martínez”, helped to boost this sector. And although the private company contributes in a huge percentage within the industry, the public sector continues to be the major investor in construction matters. In this way, the works that have been announced for this year, such as the ring road and others, generate optimism for both entrepreneurs of the constructions industry and the rest of the population.
Amandamiguel Ramírez
Associate
García & Bodán
Nicaragua