Costa Rica Economic Forecast

Costa Rica Economic Outlook

May 15, 2018

President Carlos Alvarado was sworn into office on 8 May, taking the reins of a country whose economy has performed modestly so far this year and whose public finances have continued to deteriorate. Economic activity strengthened in the first quarter of 2018 compared to the previous quarter, particularly due to greater activity in the services sector. However, this did not prevent an increase in the unemployment rate, which rose as fewer individuals were employed informally. Meanwhile, in April, the OECD said that comprehensive reforms were necessary to stabilize the country’s worsening fiscal deficit. The organization recommended, in addition to tax revenue raising measures, reforms such as the implementation of a fiscal spending rule and improved debt management practices. During his inauguration this month, President Alvarado implored lawmakers in the Legislative Assembly to pass a bill to help reduce the deficit. However, in a sign of how difficult this may prove, public sector workers have recently demonstrated against the bill.

Costa Rica Economic Growth

Increased political certainty and strong demand from key export markets such as the United States should support economic growth this year. However, persistent fiscal deficits and growing public debt will continue weighing on prospects. The analysts we surveyed this month expect GDP to grow 3.4% in 2018, which is down 0.1 percentage points from last month’s projection, and 3.6% in 2019.

Costa Rica Economy Data

20132014201520162017
Population (million)4.74.84.94.95.0
GDP per capita (USD)10,44910,33810,85010,737-  
GDP (USD bn)49.249.552.652.7-  
Economic Growth (GDP, annual variation in %)2.13.04.74.3-  
Consumption (annual variation in %)2.93.44.34.1-  
Investment (annual variation in %)-1.12.98.9-1.5-  
Unemployment Rate8.39.79.69.5-  
Fiscal Balance (% of GDP)-5.4-5.7-5.9-  -  
Public Debt (% of GDP)35.838.340.8-  -  
Money (annual variation in %)11.911.613.97.3-  
Inflation Rate (CPI, annual variation in %, eop)3.75.1-0.80.8-  
Inflation Rate (CPI, annual variation in %)5.24.50.80.0-  
Inflation (PPI, annual variation in %)1.44.9-0.40.3-  
Benchmark Interest Rate (%)6.507.205.954.45-  
Exchange Rate (vs USD)500.7540.8537.3553.2-  
Exchange Rate (vs USD, aop)501.0537.2534.6544.0-  
Current Account (% of GDP)-4.9-5.0-4.5-3.6-  
Current Account Balance (USD bn)-2.4-2.5-2.4-1.9-  
Trade Balance (USD billion)-6.4-6.4-5.9-5.4-  
Exports (USD billion)8.69.19.29.9-  
Imports (USD billion)15.115.615.115.3-  
Exports (annual variation in %)-1.15.60.77.8-  
Imports (annual variation in %)1.23.1-2.81.3-  
International Reserves (USD)7.37.27.87.6-  
External Debt (% of GDP)39.844.045.448.9-  

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Costa Rica Facts

ValueChangeDate
Exchange Rate565.3-0.57 %May 21

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Costa Rica Economic News

  • Costa Rica: Economic activity decelerates in March

    May 11, 2018

    In March, annual growth in economic activity decelerated to 3.1% from an upwardly revised 3.2% expansion in February (previously reported: +3.0% year-on-year), according to the monthly index of economic activity (IMAE, Indice Mensual de Actividad Económica) published by the Central Bank of Costa Rica (BCCR). March’s slowdown in growth came amid a year-on-year contraction in the mining and quarrying sector and a stagnant construction sector.

    Read more

  • Costa Rica: Inflation decelerates in April

    May 9, 2018

    Consumer prices fell 0.08% in April compared to the previous month, more than the 0.03% decrease recorded in March.

    Read more

  • Costa Rica: Economic activity decelerates in February

    April 10, 2018

    In February, year-on-year growth in economic activity decelerated to 3.0% from a 3.1% expansion in January, according to the monthly index of economic activity (IMAE, Indice Mensual de Actividad Económica) published by the Central Bank of Costa Rica (BCCR) on 10 April. February’s weaker result was driven by a slower expansion in transportation and storage activity compared to January, alongside weaker growth in the activity groups of professional services, finance and insurance, and mining and quarrying.

    Read more

  • Costa Rica: Inflation accelerates in March

    April 6, 2018

    Consumer prices fell 0.03% in March compared to the previous month, contrasting a 0.21% month-on-month increase in February.

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  • Costa Rica: Carlos Alvarado elected president on 1 April, can he bring the fiscal deficit down?

    April 1, 2018

    Carlos Alvarado of the incumbent Citizen’s Action Party won the second, decisive round of Costa Rica’s presidential elections on 1 April, winning approximately 60% of the total vote.

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