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Nicaragua Export Drop Seen Less Than Feared

COVID-19 recovery is on the horizon but the pandemic's impact on sustainability, retail, product development and consumer buying patterns means the denim industry must evolve. Join Rivet on April 20th at 11 am ET for the COVID, One Year Later roundtable.

MEXICO CITY – Nicaragua’s apparel exports are forecast to decline in the neighborhood of 20 percent this year. While that’s a harrowing figure, it’s a far cry from the 40 percent drop many predicted earlier this year as a spike in U.S. orders compounded the positive effects of light social-distancing measures, according to observers.

Rising orders from U.S. buyers mean exports will now decline 15 to 20 percent as “there is an improvement [in trade] though not enough to offset an overall decline,” said trade lobby group Anitec’s executive director Dean Garcia.

Shipments totaled $1 billion as of September, down 24.7 percent against the same year-ago period, he added. Last year, exports clocked in at $1.8 billion.

In common with other Central American countries, Nicaraguan makers shifted to making healthcare and personal protective equipment, helping offset declines elsewhere. This, helped by the capital city Managua’s decision to avoid strict lockdowns to stem a recession in the impoverished nation, meant many factories continued to operate, producing apparel for the likes of Walmart and Amazon.

“In retrospect, it was a good idea,” said Pedro Ortega, who leads local maquila trade union Mesa Laboral de Sindicatos de la Maquila. “If we did a quarantine here, the agricultural season would have not been productive and the economy would have suffered.

“We had growth in the first half, both in the economy and our exports. This year, we expect Nicaragua will export more textiles than Honduras, leading the region, as Honduras is the biggest manufacturer.”

Hurricanes Eta and Iota, which battered Honduras more severely than Nicaragua, have forced clothing manufacturers such as Gildan to alter production facilities or shift output to Nicaragua, helping to further boost shipments, according to Ortega. He expects exports will surpass $1.5 billion for the year, just $300 million shy of 2019’s total.

“Exports are going to be better than expected. Healthcare products will help but with Eta and Iota, some brands have made last-minute moves to Nicaragua and Korean-owned manufacturers are now even working on Saturdays to meet more orders than originally stipulated.”

The pandemic did force some makers to suspend production until January, idling workers who made products in those facilities, according to Ortega.

He said industry employment has largely recovered, also despite the storms, which delayed workers’ commutes, causing some minor production delays.

Despite being criticized for a lax pandemic response, Ortega believes the government did a good job in forcing the maquila industry to follow strict health protocols to protect factory operators, more so than other Central American countries.

“We had a specific prevention and mitigation protocol other countries didn’t have,” Ortega said. “The government and businesses operating in the free-trade zones, as well as businesses, were on top of the situation to control the pandemic.”

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