Costa Rica Economic Forecast

Costa Rica Economic Outlook

March 12, 2019

The economy slowed in 2018 due to weak consumption growth and sluggish fixed investment, according to preliminary data released by the Central Bank. Although GDP data for the fourth quarter will only be released on 29 March, the Central Bank’s monthly economic activity data points to a sharp slowdown in the final months of the year. This is likely due to public street protests against new fiscal reform measures including the replacement of the old general sales tax with a VAT. On 25 February, the IMF said the fiscal reform was critical to restoring sustainability of government finances; however, the Fund also stated that additional consolidation steps should be pursued to reduce the government’s high near-term financing needs. Meanwhile, a vast new industrial port was inaugurated in Limón on 28 February, which will significantly enhance the maritime connectivity of Costa Rica.

Costa Rica Economic Growth

Stronger fixed investment growth on the back of a more certain and sustainable fiscal outlook, coupled with solid export growth linked to a weaker colón and robust U.S. demand, should lead to an uptick in economic growth this year. That being said, fiscal austerity and tighter monetary conditions, compounded by ongoing instability in neighboring Nicaragua, could limit growth prospects. Met the why particular Consensus Forecast panelists expect GDP to grow 2.8% in 2019, which is unchanged from last month’s forecast, and 3.0% 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 Rate607.2-0.57 %Mar 11

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