Costa Rica Economic Forecast

GDP growth ticked up in year-on-year terms in Q3 thanks to an upturn in domestic demand. Lower price pressures and interest rates prompted accelerations in private consumption and fixed investment. However, exports growth roughly halved. Turning to the current quarter, our panelists see the economy expanding at a slower pace. That said, October data gives room for optimism: Merchandise exports grew at a brisker annual pace relative to Q3’s average, while tourist arrivals continued to expand at a healthy rate. In other news, in early November, Moody’s upgraded the country’s rating to “B1” from “B2” with a positive outlook, citing robust economic growth and sustained fiscal consolidation efforts. These factors unlocked IMF funding worth USD 756 million in late October.

Consumer prices fell 1.3% in annual terms in October, following September’s 2.2% decline. Stronger price pressures for housing and utilities were behind October’s smaller fall. Prices are set to rise again in 2024. However, inflation will remain subdued amid softer economic growth. Commodity price swings and the colón’s strength are key factors to monitor.