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Costa Rica GDP Q3 2023

Costa Rica: Economic growth records best result since Q1 2022 in the third quarter

GDP growth accelerated moderately to 5.9% year on year in the third quarter, from 5.8% in the second quarter. Q3’s reading marked the best result since Q1 2022.

The uptick was driven by stronger domestic demand. Private consumption sped up to 5.2% year on year in the third quarter (Q2: +4.5% yoy), which marked the best reading since Q1 2022. Falling consumer prices throughout the period provided support to households. Moreover, government spending improved to a 0.9% expansion in Q3 (Q2: +0.5% yoy). Meanwhile, fixed investment growth accelerated to 15.5% in Q3—as firms benefitted from lower interest rates in the period—from the 13.1% expansion logged in the previous quarter.

On the flip side, the external sector deteriorated. Exports of goods and services growth fell to 7.8% in Q3 (Q2: +16.3% yoy), marking the worst result since Q1 2021. In addition, imports of goods and services growth waned to 6.8% in Q3 (Q2: +10.6% yoy).

Looking ahead, the Costa Rican economy is seen kicking into a lower gear. The external sector is set to lose further steam on weaker external demand from the U.S. Meanwhile, domestic activity will remain the key engine of growth as the Central Bank continues to lower rates, and inflation increases only gradually.

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