By Noe Torres and Ismael Lopez
MEXICO CITY/MANAGUA (Reuters) – Some of Mexico’s largest companies operating in Nicaragua are counting the costs of a political crisis engulfing the Central American country since violent protests against President Daniel Ortega erupted in April last year.
The demonstrations, in which more than 300 people have died, have hit Nicaragua’s fragile economy hard. Gross domestic product shrank by 3.8% in 2018, and the World Bank said in April economists expected the slump to deepen this year.
Three of Mexico’s top companies – cement maker Cemex
Cemex Latam Holdings
“The crisis remains unresolved and continues to affect economic activity, including demand for cement,” the Cemex subsidiary said in second quarter results, without giving details.
“Nicaragua is still a challenging environment to operate in,” Constantino Spas, the company’s chief financial officer, said in an earnings call with analysts.
Nicaraguan internal commerce fell 11.4% in 2018, according to the central bank. Experts consulted by Reuters highlighted tourism, the retail sector and manufacturing as some of the worst-affected sectors of the economy.
“We are living a crisis of confidence marked by uncertainty from consumers and investors,” said Jose Adan Aguerri, president of Nicaragua’s main business association COSEP.
To be sure, not all companies have been hit.
Wal-Mart de Mexico
Mexican dairy company Grupo Lala
“This is the first quarter (since) the crisis in Nicaragua showing early signs of top and bottom line recovery,” Lala’s vice president of finances Alberto Arellano told an earnings call.
(Reporting by Noe Torres and Ismael Lopez; writing by Stefanie Eschenbacher; Editing by Sonya Hepinstall)