Costa Rica and the New Economic Order

Weak growth and high fiscal deficits caused Costa Rica not to share the good economic times experienced by other South American countries such as Panama and Mexico.

Tuesday, February 1, 2011


©image:

International analysts believe that the Costa Rican economy has moved away, unfortunately, from the Latin American emerging economies.

Aldesa analysis says that the growth pace in emerging and developed economies seen since the last global crisis will continue in 2011 leading to a new balance of power which will benefit the economies of China, Brazil and India.

According to analysts of U.S. banking giant JP Morgan, by 2017, emerging markets will constitute 50% of global GDP, while China, India and U.S. will be the three largest economies in the world. In 2030 Brazil will be the fifth largest economy in the world, ahead of Japan and the European Union.

The U.S. has escaped the fate of developed countries which have had anemic growth, and today it showed, with an increase in production of 3.2% during the last quarter of 2010, that shares part of the reality of emerging countries in production, consumption and also some of the serious reality of developed economies, a huge fiscal deficit.

U.S. growth has recovered due to domestic consumption and strong exports. Multinational corporations in this country have benefited from growing demand from emerging economies and as a result, they have injected dynamism into the economy.

However, a fiscal deficit equivalent to 10% of GDP, public debt at 60% of GDP and unemployment, which represents 9.4% of the population, continues to pose threats to growth and long-term stability and are characteristics shared with developed countries. This is the main difference between the current economic scenario and a few decades ago, when third world countries were growing and needed little help from the government to move forward.

And Costa Rica?
International analysts believe that the country has distanced itself, unfortunately, from the Latin American emerging economies. Weak growth and high fiscal deficits caused Costa Rica not to share the good results being experienced by South American countries, such as Panama and Mexico.

Reasons include the low participation in the country's exports of emerging economies such as China and Brazil. Costa Rica's condition of net importer, a flexible exchange rate and unproductive government spending are other reasons for Costa Rica to show a lag in economic growth. Fortunately, many of these negative factors can be improved, and in general terms, Costa Rica still has a good reputation in the international markets.



Market Intelligence

Everything about exports and imports in Costa Rica.

Top companies - Quantities, amounts and prices.

more info

More on this topic

Fitch: Latin American Sovereign Outlook 2009

March 2009

Fitch expects that Latin America’s real GDP will contract by 0.9% in 2009, with Brazil’s economy stagnating at best and Mexico contracting by over 2%.

Latin American economies have recoupled with the crisis in the developed economies. Since September 2008, Latin American countries have been buffeted by stronger external headwinds, as evident from the fall in regional currencies and stock markets and from widening bond spreads.

Costa Rica As Seen by the IMF in January 2015

February 2015

Despite being reduced compared to 2013, the IMF insists that the fiscal deficit remains a thorn in its side for preventing the economy from reaching its full potential.

From a statement issued by the International Monetary Fund (IMF):

January 30, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Costa Rica.

Costa Rica: Fitch Changes Outlook to "Negative"

January 2015

In a clear warning signal, the ratings agency has changed the outlook for Costa Rica's sovereign debt from stable to negative, arguing that there is a lack of measures to reduce the fiscal deficit.

From a statement issued by Fitch Ratings:

Fitch Ratings-New York-22 January 2015: Fitch Ratings has revised the Rating Outlook on Costa Rica's Long-term foreign and local currency Issuer Default Ratings (IDRs) to Negative from Stable and affirmed the IDRs at 'BB+'. The issue ratings on Costa Rica's senior unsecured foreign and local currency bonds have been affirmed at 'BB+'. The Short-term foreign currency IDR has been affirmed at 'B' and the Country Ceiling at 'BBB-'.

Costa Rica: Fiscal Deficit Threat to Risk Rating

January 2014

Fitch Ratings has affirmed its rating at BB + but points to the fiscal deficit as a credit weakness.

The rating agency Fitch Ratings announced that it will keep the BB + rating for Costa Rica, maintaining the stable outlook. However, it noted that the high budget deficit represents a weakness for the country.

 close (x)

Receive more news about Development

Suscribe FOR FREE to CentralAmericaDATA EXPRESS.
The most important news of Central America, every day.

Type in your e-mail address:

* Al suscribirse, estará aceptando los terminos y condiciones


Costa Rica Coffee Farm and Development Property

Sustainable 70 Acre Coffee Farm, San Ramon, Costa Rica Coffee Estate, development property with 20 titled lots, ready to develop with roads, water and power. Great Location, close to everything.
Ideal area for living or developing an ecologically...

Stock Indexes

(Mar 23)
Dow Jones
0.00%
S&P 500
-0.03%
Nasdaq
-0.13%

Commodities

(Mar 23)
Brent Crude Oil
50.61
Coffee "C"
142.70
Gold
1,248
Silver
17.550