Costa Rica: GDP growth bucks trend, accelerates in Q2
September 30, 2015
In the second quarter of 2015, GDP expanded 2.5% over the same period of the previous year, coming in above Q1’s revised 2.2% increase (previously reported: +2.6% year-on-year). Q2’s acceleration is the first in seven quarters, and was mainly due to a strong increase in domestic demand, particularly investment, which more than offset a sharp deterioration in the external sector.
In Q2, domestic demand increased from Q1’s 3.8% increase to a much stronger 9.0% expansion, the strongest pace of growth since March 2011. Total consumption expanded 4.1% in Q2 (Q1: +4.4% year-on-year). Private consumption decelerated slightly to 4.1% (Q1: +4.5% yoy) while government spending recorded a 3.6% expansion in Q2, down slightly from Q1’s print of 3.7%. Gross fixed investment surged to a 16.8% expansion in Q2, well above the 0.6% increase recorded in Q1. As a result, total investment also witnessed a drastic increase of 22.2%, up from just 2.1% in Q1.
On the external side of the economy, exports of goods and services registered a 12.0% contraction in Q2 (Q1: -9.6% yoy). Imports also contracted, falling 1.2%, which was up from Q1’s 6.7% decrease. As exports dropped at a faster pace than imports, the external sector’s net contribution to overall growth deteriorated to minus 6.1 percentage points from the minus 1.5 percentage points recorded in Q1.
Author: Robert Hill, Economist