Costa Rica Economic Forecast

Costa Rica Economic Outlook

May 14, 2019

The economy seemingly performed poorly in the first quarter, after large public protests related to now-approved fiscal policy reform caused growth to slump to a nearly six-year low in Q4 2018. Growth in economic activity was limp in January–March, supported by expansions in the services and construction sectors, but weighed on by the agricultural sector, which was affected by a drought caused by the El Niño effect. Meanwhile, the unemployment rate ticked down in Q1 from Q4, although it remained higher than in the same quarter a year earlier. On 15 April, the IMF called for the “full and timely” implementation of the fiscal reform approved late last year. This includes swapping the old general sales tax with a value-added tax in July this year, in order to “rebuild fiscal space to manage potential shocks”.

Costa Rica Economic Growth

Stronger fixed investment growth on the back of a more certain fiscal outlook should lead to an uptick in economic growth this year. In addition, strong export growth linked to a weaker colón and February’s opening of a large industrial port in Limón should further drive economic momentum. Ongoing instability in neighboring Nicaragua, however, could weigh on exports. Met the why particular Consensus Forecast panelists expect GDP to grow 2.8% in 2019, which is unchanged from last month’s forecast, and 2.8% again 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 Rate594.7-0.57 %May 13

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