Costa Rica GDP Q1 2016

Costa Rica

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.

The Central Bank expects the economy to expand 4.3% in 2016 and 4.4% in 2017. FocusEconomics Consensus Forecast panelists expect GDP to expand 3.6% in 2016, which is unchanged from last month’s projection. For 2017, participants see economic growth accelerating to 3.8%.

Author:, Economist

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Costa Rica GDP Chart

Costa Rica GDP Q116

Note: Year-on-year changes of GDP in %.
Source: Costa Rica Central Bank (BCCR) and FocusEconomics Consensus Forecast.

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