Costa Rica Economic Forecast

Costa Rica Economic Outlook

January 21, 2020

The 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 Growth

Economic 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.

Costa Rica Economy Data

20142015201620172018
Population (million)4.74.84.94.95.0
GDP per capita (USD)10,48510,57411,29211,65911,707
GDP (USD bn)49.650.754.857.258.1
Economic Growth (GDP, annual variation in %)2.33.53.64.23.4
Consumption (annual variation in %)3.03.94.23.62.8
Investment (annual variation in %)-0.33.33.04.8-3.1
Unemployment Rate8.39.79.69.59.3
Fiscal Balance (% of GDP)-5.4-5.6-5.7-5.3-6.1
Public Debt (% of GDP)35.938.541.045.148.7
Money (annual variation in %)14.311.76.12.1-1.0
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 %)-  -  -  -  -  
Benchmark Interest Rate (%)6.507.205.954.455.95
Exchange Rate (vs USD)500.7540.8537.3553.2571.4
Exchange Rate (vs USD, aop)501.0537.2534.6544.0567.9
Current Account (% of GDP)-4.9-4.8-3.5-2.2-3.0
Current Account Balance (USD bn)-2.4-2.5-1.9-1.3-1.7
Trade Balance (USD billion)-6.4-6.4-5.5-5.3-5.3
Exports (USD billion)8.69.19.29.910.6
Imports (USD billion)15.115.614.715.215.9
Exports (annual variation in %)-1.15.60.77.96.9
Imports (annual variation in %)1.23.1-5.23.34.4
International Reserves (USD)7.37.27.87.67.1
External Debt (% of GDP)39.342.643.144.746.8

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Costa Rica Facts

ValueChangeDate
Exchange Rate571.0-0.57 %Jan 01

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