Costa Rica: GDP expands on stronger domestic demand
June 30, 2011
In the first quarter, GDP added 2.7% over the same period last year, which was below the 3.1% increase recorded in the fourth quarter (previously reported: +3.7% year-on-year). The expansion was driven by strong domestic demand while the external sector deteriorated. Domestic demand expanded a robust 9.2% in Q1 (Q4 2010: +7.0% yoy) on the back of strong investment, fuelled by a positive contribution from inventory changes, which compensated for slower consumption. Total consumption decelerated from the 5.1% increase (previously reported: +4.7% yoy) recorded in the fourth quarter to 4.5%, whereas gross fixed investment expanded 2.8% over the same period last year, which was slightly above the unrevised 2.5% expansion recorded in the fourth quarter. Exports of goods and services expanded 1.9%, decelerating from the 4.1% expansion recorded in Q4, while imports increased 15.4% (Q4 2010: +12.3% yoy). As a result, the net contribution from the external sector to overall growth deteriorated from minus 3.7 percentage points in the fourth quarter to minus 7.0 percentage points in the first. At the sector level, services expanded 4.8%, while the industrial and agricultural sectors contracted over the same period last year. More recent data from April suggest a slight acceleration in the second quarter, as economic activity increased 3.9% over the same month the year before, according to the monthly index of economic activity (IMAE, indice Mensual de Actividad Economica). The reading was above the 3.3% expansion observed in March and marked the fastest pace since July 2010. The Central Bank estimates the economy will expand 4.3% this year and grow 4.5% in 2012.