Costa Rica: GDP contraction eases further in Q1
GDP slid at a milder pace of 1.6% year-on-year in the first quarter of 2021 (Q4 2020 -2.7% yoy), according to rebased national accounts data, with the new base year referring to 2017 prices. Q1’s reading marked the softest contraction since the outbreak of the pandemic.
Domestically, public consumption growth accelerated in Q1, clocking in at 9.6% (Q4 2020: +3.0% yoy). Meanwhile, private spending fell at a slower pace of 1.9% year-on-year in the first quarter (Q4 2020: -3.3% yoy), likely supported by a decreasing unemployment rate (Q1: 18.7%; Q4: 20.0%) likely contributed to supporting household spending in the period. However, fixed investment contracted at a quicker rate of 7.8% in Q1 (Q4 2020: -4.6% yoy).
Turning to the external sector, exports of goods and services declined at a softer pace of 8.3% in annual terms in Q1 compared to the prior quarter’s 6.1% fall. Similarly, imports of goods and services slid 1.3% in Q1, moderating from Q4 2020’s 5.8% drop and pointing to a continued recovery in domestic demand.
Moving to the second quarter of the year, high-frequency data shows that the gradual improvement in economic conditions continued, with growth in economic activity accelerating markedly in April—although this was flattered by a favorable base effect. Our panelists expect the economy to have bounced back to growth in Q2. The vaccination drive picked up pace throughout the quarter, boding well for activity in the period and heading into Q3.