Costa Rica
Costa Rica’s economic activity has continued the slowdown
observed in 2012 with GDP growth of 2.5% for the first half of
2013 (down from 5.9% in 1H12). The Banco Central de Costa
Rica (BCCR)has revised the annual GDP growth rate to 3.0%
from the 4.0% originally forecasted due to the slowdown in
external and internal demand factors related to the Eurozone
recession, weak U.S. growth and a slowdown in private
consumption (2.9% versus 4.5% in 1H12). Growth was led
by the services industries particularly transport, storage and
communications sector 3.8% (4.1% 1H12), trade, restaurants
and hotels sector 3.3% (4.0% 1H12) and business services
5.7% (10.2% 1H12). Construction grew by 4.1% (4.8% 1H12)
and manufacturing fell by 0.7% (10.3% 1H2). Government
consumption grew by 2.3% (1.5% 2012) due to increase
in purchases of goods and services and to a lesser extent
construction. The agriculture industry fell by 0.3% due to
reduced export demand, disease and higher production costs.
period last year. Manufacturing decreased 0.7% (+10.3%
2012) due to declines in coffee, palm oil, electronics, medical
equipment and fruit juices and concentrates but there was
positive growth in beef and dairy and plastics which grew by
7.8% and 8.2% respectively. Service industries showed the
best results in the first half of 2013 (6.5%), accounting for
USD2.9 billion, growth of 7.7% compared to the same period
in 2012, while FDI reached USD1.3 billion. This represented
33.7% of total exports by Costa Rica during the first half of the
year. The current account deficit is forecasted to increase to
5.0% of GDP for 2013 (4.4% of GDP in 2012) and continue to
be financed by FDI (3.9% of GDP) as well as the placement of
bonds and external borrowing (USD1.0billion).
For the period Jan –Sep 2013 the Central Government
accumulated a deficit of 3.8% of GDP (3.2% Jan –Sep 2012)
due to the growth in total expenditure of 12.6% causing
the government deficit to widen 26.7% to USD1.85 billion
(USD1.46 billion Jan –Sep 2012). Revenue (+7.9%) was driven
by a 9.3% surge in tax collections while expenditure (+12.6%)
The Banco Central de Costa Rica (BCCR)has revised the annual GDP
growth rate to 3.0% from the 4.0% originally forecasted due to the
slowdown in external and internal demand factors...
After a period of over two years, inflation broke the upper
limits of the BCCR’s target range of 5% ± 1 percentage
point. Inflation measured 6.52%, 6.21% and 6.31% for the
months of February, March and April. Inflation for the 1H13
averaged 5.9% with an annual rate of 5.1% through June.
The increased rate was driven by adjustments in the prices
of goods and regulated services and supply shocks in the
agricultural industry. However, these impacts were short
term and inflation normalised within the BCCR’s range in
the preceding months. Inflation is forecasted to measure
4.7% for 2013.
Costa Rica’s trade deficit for the first eight months of the year
totalled USD4.1 billion or a 7.5% increase over the USD3.9
billion for the same period 2012. Imports increased 2% from
USD11.6 billion to USD11.9 billion while exports decreased
0.8% to USD7.7 billion from USD7.8 billion for the same
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Caribbean Investment iQ December 2013
grew mainly due to higher interest payments on domestic
debt (+27.5%), current transfers to the public sector (+14.3%)
and wages and salaries (+10.5%). The Central Government
deficit is forecasted to increase to 25.7% to 5.0% of GDP
(USD2.45 billion) in 2013 (4.4% of GDP – USD1.95 billion
2012) driven by increased spending for the 2014 elections.