Costa Rica Economic Outlook
January 21, 2020The economy regained traction in Q3, after growth slowed to a near one-decade low in Q2. The acceleration was largely due to a sharp increase in government spending, thanks to a ramp up in hiring of healthcare workers, although a low base effect also boosted the economy. Private consumption growth accelerated in Q3, supported by a decrease in the unemployment rate in the quarter, and despite lower consumer confidence, which was likely dragged on by the introduction of a VAT in July. Fixed investment, meanwhile, contracted as bank lending slumped, while export growth slowed. Turning to Q4, the panorama looks promising: Economic activity growth accelerated to a near one-and-a-half year high in November, while consumer confidence also picked up from the previous quarter, although it remained subdued. Moreover, Central Bank interest rate cuts should have supported bank lending somewhat.
Costa Rica Economic GrowthEconomic growth should accelerate this year, notably thanks to a rebound in fixed investment after a poor 2019, aided by last year’s interest rate cuts. However, downbeat business and consumer confidence, a slowdown in the United States and constrained government spending will all weigh on prospects. FocusEconomics Consensus Forecast panelists expect GDP to grow 2.6% in 2020, which is unchanged from last month’s forecast, and 3.0% in 2021.
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|Exchange Rate||571.0||-0.57 %||Jan 01|
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Costa Rica Economic News
January 10, 2020
Annual economic growth in cyclically-adjusted terms accelerated to 2.9% in November from 2.7% in October, representing a 16-month high.
January 8, 2020
Consumer prices fell 0.1% in December in month-on-month terms, contrasting the 0.2% increase in November.
December 23, 2019
In the third quarter of 2019, the economy grew 2.3% compared to the same quarter a year earlier, up from the second quarter’s 0.6% growth reading and representing the fastest expansion in one year. The third quarter’s acceleration was largely due to faster government consumption growth of 5.5%.
December 18, 2019
At its 18 December monetary policy meeting, the Central Bank of Costa Rica cut the key policy rate to 2.75% from 3.25%, marking both the lowest point since May 2017 and the seventh interest rate cut in 2019.
November 20, 2019
At its 20 November monetary policy meeting, the Central Bank of Costa Rica left the key policy interest rate unchanged at 3.25%, keeping it at its lowest level since May 2017.