Costa Rica Economic Forecast

Costa Rica Economic Outlook

January 15, 2019

The economy lost its footing in the third quarter, with annual economic growth slowing to an over five-year low. The slowdown primarily came on the back of lackluster private and government consumption. Private consumption was weighed on by rising unemployment, a large decrease in consumer confidence and widespread protests in September related to the fiscal reform bill (which passed on 3 December). Government consumption stalled in the quarter, with no change observed compared to the same quarter a year earlier. On a brighter note, fixed investment growth held up well—although only because of a low base effect—and exports outpaced imports. The fourth quarter, meanwhile, began on an unconvincing note: Growth in economic activity slumped to a near five-year low in November, according to the Central Bank’s monthly index; consumer confidence deteriorated further in November and fiscal reform protests lasted until mid-December.

Costa Rica Economic Growth

The economy should be supported this year by stronger export growth—likely linked to a weaker colón and robust U.S. demand—and a more certain fiscal outlook. However, the immediate effects of fiscal austerity and tighter monetary conditions, in addition to ongoing instability in neighboring Nicaragua, are likely to limit growth prospects. Met the why particular Consensus Forecast panelists expect GDP to grow 2.9% in 2019, which is down 0.1 percentage points from last month’s forecast, and 3.2% in 2020.

Costa Rica Economy Data

20132014201520162017
Population (million)4.74.84.94.95.0
GDP per capita (USD)11,44911,33811,85011,66711,657
GDP (USD bn)45.446.550.352.452.9
Economic Growth (GDP, annual variation in %)2.33.53.64.23.2
Consumption (annual variation in %)3.03.94.23.32.7
Investment (annual variation in %)-0.33.33.04.0-3.1
Unemployment Rate8.39.79.69.59.3
Fiscal Balance (% of GDP)-5.4-5.6-5.7-5.3-6.2
Public Debt (% of GDP)35.838.411.945.049.2
Money (annual variation in %)11.911.613.97.39.5
Inflation Rate (CPI, annual variation in %, eop)3.75.1-0.80.82.6
Inflation Rate (CPI, annual variation in %)5.24.50.80.01.6
Inflation (PPI, annual variation in %)1.44.9-0.40.33.1
Benchmark Interest Rate (%)6.507.205.954.455.95
Exchange Rate (vs USD)500.7511.8537.3553.2571.4
Exchange Rate (vs USD, aop)501.0537.2534.6544.0567.9
Current Account (% of GDP)-5.4-5.3-3.8-2.8-3.2
Current Account Balance (USD bn)-2.4-2.5-1.9-1.5-1.7
Trade Balance (USD billion)-6.4-6.4-5.5-5.4-5.3
Exports (USD billion)8.69.19.29.911.6
Imports (USD billion)15.115.614.715.315.9
Exports (annual variation in %)-1.15.60.77.87.0
Imports (annual variation in %)1.23.1-5.23.64.3
International Reserves (USD)7.37.27.87.67.1
External Debt (% of GDP)42.946.546.948.750.8

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Costa Rica Facts

ValueChangeDate
Exchange Rate598.5-0.57 %Jan 21

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