Costa Rica: GDP growth picks up in Q1
June 30, 2016
In the first quarter of 2016, GDP expanded 4.8% over the same period of the previous year. The reading marked an improvement over Q4’s growth of 3.3%. Domestic demand slowed drastically and the external sector improved.
In Q1, domestic demand moderated from Q4’s astounding 11.4% increase to a much slower, but still robust, 3.5% expansion. Private consumption rose 4.2%, down from Q4’s 4.5% increase, while government spending eased from a 2.7% expansion in Q4 to a 1.5% increase in Q1. A resounding increase in inventories between Q4 2014 and Q1 2015 resulted in a positive shock to total investment growth in Q4 2015 and it grew 42.3%. This base effect disappeared in Q1 2016 and total investment growth slowed drastically to 2.6%. Fixed investment growth also observed a decrease, albeit a milder one, falling from 6.3% in Q4 to 3.5% in Q1.
On the external side of the economy, exports of goods and services registered a 7.9% increase in Q1 (Q4: -6.8% year-on-year). Imports, on the other hand, saw weaker growth, expanding 5.0% in Q1, which was down from Q4’s 10.1% increase. The result was a positive contribution to overall growth from the external sector of plus 1.2 percentage points, contrasting the 8.0 percentage point detraction seen in Q4.
Author: Robert Hill, Economist