Costa Rica GDP

Costa Rica

Costa Rica: GDP growth slows down but remains solid in Q2

September 30, 2014

In the second quarter of 2014, GDP expanded 3.8% over the same period of the previous year. The reading came in below the 4.1% increase registered in the first quarter. Q2’s deceleration was mainly driven by sluggish domestic demand.

In Q2, domestic demand moderated from Q1’s 4.9% rise to a weaker 1.7% expansion. Total consumption expanded 3.2% in Q2 (Q1: +3.6% year-on-year). In particular, private consumption rose 3.3% (Q1: +3.7% yoy) while government spending fell from Q1’s 3.3% expansion to a 2.8% increase in Q2. Gross fixed investment expanded 4.3% in Q2, which was somewhat below the 4.9% rise registered in Q1. Total investment swung from Q1’s strong 8.1% expansion to a 2.1% contraction.

On the external side of the economy, exports of goods and services decreased from the 2.2% expansion registered in Q1 to zero growth in Q2. Imports swung from Q1’s 3.8% increase to a 3.9% contraction. As imports dropped at a faster pace than exports, the external sector’s net contribution to overall growth rebounded from the minus 0.8 percentage points recorded in Q1 to plus 2.2 percentage points in the second quarter.

A quarter-on-quarter comparison does not corroborate the slight deceleration suggested by the annual figures. In Q2, GDP expanded a seasonally-adjusted 1.2% over the previous quarter, which exceeded the 0.6% increase seen in the first quarter.

According to the country’s Macroeconomic Program 2014–2015, the Central Bank expects the economy to expand 3.8% in 2014. FocusEconomics Consensus Forecast panelists are in line with the Central Bank and expect GDP to expand 3.7% in 2014, which is unchanged from last month’s projection. For 2015, participants see economic growth accelerating to 3.8%.

Author: Teresa Kersting, Economist

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Costa Rica GDP Chart

Costa Rica GDP Q214

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

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