Costa Rica: Economy records best result since Q3 1992 in the third quarter
December 30, 2021
GDP growth improved to 12.1% year-on-year in the third quarter from 9.7% in the second quarter, marking the best result since Q3 1992. On a seasonally-adjusted quarter-on-quarter basis, the economy grew at the second highest rate since current records began, climbing 3.9% in Q3 (Q2: +1.9% s.a. qoq).
In annual terms, the improvement was led by the domestic economy: Household spending growth accelerated to 8.1% year-on-year in the third quarter, which marked the best reading since Q1 2012 (Q2: +7.2% yoy), while government consumption rebounded, growing 2.7% (Q2: -4.7% yoy). Conversely, fixed investment growth moderated to 8.1% in Q3, from 15.3% in the prior quarter.
Externally, growth in exports of goods and services softened to 27.4% in Q3 (Q2: +34.1% yoy). In addition, growth in imports of goods and services moderated to 18.7% in the quarter (Q2: +26.7% yoy).
Moving forward to Q4, GDP is expected to have grown at a more moderate albeit still-robust rate, amid a subsiding base effect. Despite slowing somewhat from the previous quarter, economic activity grew solidly in October and November, hinting at healthy underlying dynamics. However, ongoing pandemic-related uncertainty is a key risk to the outlook, with a rapid rise in daily Covid-19 rates at the end of December a cause for concern.
Author: Jonuel Pérez, Junior Economist