GDP in Costa Rica

Costa Rica GDP | Economic News & Forecasts

Costa Rica - GDP

Economic growth accelerates in the second quarter

The economy grew at the fastest rate in a year in the second quarter of 2018, according to the Central Bank of Costa Rica. In annual terms, economic growth clocked in at 3.6% in Q2, up from the revised 2.7% reading for Q1 (previously reported: +2.5% year-on-year). This was, to a large extent, due to stronger fixed investment growth.

Private consumption increased 2.6% in Q2, a smidgen less than the 2.7% expansion recorded in Q1. Coinciding with this slowdown was an uptick in the unemployment rate to 8.7% from 8.5% a year earlier. Moreover, consumer confidence remained firmly in pessimistic territory throughout the second quarter. Government consumption growth hit 2.8% in Q2, up from 2.7% in Q1. Fixed investment increased 2.3% in Q2—contrasting the decrease of 3.9% recorded in Q1—partly due to a low base effect.

Growth in exports of good and services decelerated to 1.6% in Q2 from 8.3% in Q1. This was because exports of services fell, contrasting the previous quarter’s increase, while external sales of goods increased at a meager pace. Imports of goods and services, meanwhile, increased 3.3% in Q2, contrasting the 2.2% decrease recorded in Q1. The external sector consequently detracted 0.7 percentage points from economic growth in Q2, a significant downward swing from the 3.7 percentage-point contribution in Q1.

Looking ahead, the inauguration of President Carlos Alvarado and the new representatives of the Legislative Assembly in May lifted a cloud of political uncertainty which should benefit the economy. Moreover, the new government and legislators are now acting to reduce the fiscal deficit, which widened to the largest on record last year. A long-awaited landmark bill is currently making its way through the Assembly and could be passed before the end of this year, which should help cut the deficit. The government is also taking measures to make Costa Rica an easier and better place to do business in the long-term, something that opposition lawmakers demanded be done in parallel with fiscal reform. However, public opposition to the landmark fiscal bill has resulted in protests in recent weeks which, along with instability in neighboring Nicaragua, could dent growth prospects in the short term.

The Central Bank expects the economy to expand 3.6% in 2018 and 3.9% in 2019. Met the why particular Consensus Forecast panelists expect growth of 3.2% in 2018, which is unchanged from last month’s projection, and 3.3% in 2019, which is down 0.1 percentage points from last month’s forecast.

Costa Rica - GDP Data

2013  2014  2015  2016  2017  
Economic Growth (GDP, annual variation in %)2.3  3.5  3.6  4.2  3.2  

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Costa Rica GDP Chart

Costa Rica GDP
Note: Annual variation of gross domestic product (GDP) in %.
Source: Costa Rica Central Bank and Met the why particular calculations.

Costa Rica Facts

Exchange Rate593.8-0.57 %Oct 16

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