Costa Rica Exports (G&S, ann. var. %)

Exports in Costa Rica

GDP growth accelerates in Q1

Preliminary data shows that GDP growth picked up in Q1, accelerating to 4.0% year on year from 3.8% in the fourth quarter. Q1 marked the best reading since Q2 2022.

The reading was driven by sharper increases in private consumption and exports, as well as rebounds in public spending and fixed investment. Private consumption growth picked up to 2.5% yoy in Q1, compared to 2.2% in Q4. Public consumption rebounded to 1.6% (Q4: -2.4% yoy). Fixed investment also rebounded to 2.5% in Q1 (Q4: -1.0% yoy). The pressure on domestic demand was likely reduced by lower inflation and the Central Bank cutting interest rates.

Meanwhile, growth in exports of goods and services accelerated to 15.9% in Q1 (Q4: +9.3% yoy). Imports of goods and services rebounded 1.8% (Q4: -1.0% yoy).

Turning to Q2 2023, annual GDP growth will likely weaken slightly, as external demand will likely be dented by lower goods demand abroad. That said, strong tourism activity—especially around Holy Week in April—will boost services exports, while IMF funding will support public spending. Moreover, the expansion of high-value subsectors, such as medical technology and semiconductors, has likely started to boost the country’s productive potential.

On the reading and the 2023 outlook, analysts at the EIU commented:

“The economy proved more resilient to the difficult combination of above-neutral interest rates and rapid consumer price inflation than EIU had expected […] The expected drag from a weakening global economy has not yet materialized. There remains a substantial risk that this could come later in the year, but we think that it would be unlikely to bring down local GDP growth as far as 2.8%.”