Trade restrictions imposed by Spain, natural disasters, and foreign attacks devastate the economy of the Captaincy General of Guatemala throughout the seventeenth century.

The local government neglects agricultural production; powerful earthquakes in 1648, 1651, and 1663 cause massive destruction in the Province of Nicaragua; and from 1651 to 1689, Nicaragua is subjected to bloody incursions from English, French, and Dutch pirates.

In 1668 and 1670, these buccaneers capture and destroy the city of Granada, center of the province's agricultural wealth.

The Captaincy General of Guatemala is generally neglected by Spain.

Within the captaincy general, the Province of Nicaragua remains weak and unstable, ruled by persons with little interest in the welfare of its people.