Costa Rica Economic Forecast

Costa Rica Economic Outlook

November 6, 2018

The economy likely had a mixed performance in the third quarter of 2018, after year-on-year growth accelerated in the second quarter. In August, economic activity increased at the fastest pace in nearly two years, boosted by a resurgent construction sector. However, union strikes against the landmark fiscal reform bill, which began in early September and continued through October, will have taken a toll on the economy. The fiscal bill passed a crucial vote in the Legislative Assembly in early October but was later rejected in its current state by the Supreme Court for containing changes that could affect the independence of the judiciary. The bill should wind up for a final vote in the Legislative Assembly in the coming weeks and, if approved, would come into effect next year and should help to bring down the deficit. However, the lack of definitive approval is fraying investors’ nerves; the colón has tanked over the last month, and credit rating agency Moody’s recently put Costa Rica on review for a downgrade, citing worsening fiscal metrics.

Costa Rica Economic Growth

Rising household consumption and robust exports—aided by economic growth in the United States—should drive the economy next year. However, fiscal consolidation and tighter monetary conditions are seen weighing on prospects, as could instability in neighboring Nicaragua. Failure to enact serious tax reform which puts the public finances on a sustainable footing is a key downside risk to the economy. Met the why particular Consensus Forecast panelists expect GDP to grow 3.1% in 2019, which is down 0.1 percentage points from last month’s forecast, and 3.4% in 2020.

Costa Rica Economy Data

Population (million)
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 %)
Consumption (annual variation in %)
Investment (annual variation in %)-
Unemployment Rate8.
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-
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)1.44.9-
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)
Imports (USD billion)15.115.614.715.315.9
Exports (annual variation in %)-
Imports (annual variation in %)1.23.1-
International Reserves (USD)
External Debt (% of GDP)42.946.546.948.750.8

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Costa Rica Facts

Exchange Rate611.8-0.57 %Nov 15

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