Costa Rica Economic Forecast

Costa Rica Economic Outlook

August 7, 2018

The economy improved in recent months, after annual growth moderated to an over four-year low in the first quarter of 2018. A fast-recovering construction sector and a strong information and communications sector helped economic activity to increase at the fastest pace in over two years in May. However, from January to May, the accumulated fiscal deficit grew to 2.8% of GDP, 0.2 percentage points more than in the same period last year. Furthermore, instability in Nicaragua has created an element of uncertainty. Over 20,000 Nicaraguans have sought refuge in Costa Rica since April, according to the United Nations. Given that Nicaragua is positioned between Costa Rica and El Salvador, the two countries accelerated preparations for a ferry link in July to help mitigate disruptions to bilateral trade.

Costa Rica Economic Growth

The swearing-in 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 going forward. However, despite recent legislative efforts, a persistent fiscal deficit and high public debt will continue to weigh on prospects, as could escalated instability in Nicaragua. Our analysts expect GDP to grow 3.2% in 2018, which is down 0.2 percentage points from last month’s projection, and 3.4% in 2019.

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 Rate567.5-0.57 %Aug 15

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