Economic Status of Costa Rica, August 2010

Aldesa highlights a significant weakening in economic activity, a downward trend in inflation and a growing fiscal deficit.

Wednesday, August 25, 2010


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Significant Weakening in Costa Rica's IMAE

The Monthly Index of Economic Activity (IMAE in Spanish) for June closed 2.96% up year-on-year. After reaching a high of 6.09% in February growth has slowed. The slowdown is led by the manufacturing sector, for which year-on-year growth in June was 1.13% compared to 12.6% in January, blamed on free trade zone output. The construction sector still shows no signs of recovery.

Inflation between Limits Established by BCCR

Year-on-year inflation to July closed at 5.68%, within the range set by the Costa Rican Central Bank (BCCR) of 4% to 6%. Underlying year-on-year inflation is 3.2% after starting the year at 4.1%. Available data indicate a downward trend supported by moderate international growth and low oil prices.

Repercussions of Fiscal Deficit

Between January and May the BCCR reports that the government's cumulative expenditure exceeded revenue by 1.93% of GDP. While this deterioration in government finances may not have an impact on interest rates in 2010, once the economy picks up and private sector demand for credit recovers this could lead to pressures on resources pushing interest rates up and making economic growth difficult.

More on this topic

Guatemalan Economy: June 2010

June 2010

Fundesa, Guatemala’s Foundation for Development, issued its monthly report on the status of the economy.

Inflation

According to the Consumer Price Index, prepared by the National Statistics Institute, cumulative inflation up to May 2010 stood at 2.70%, which means that the price level rose when compared to December 2009.

SECMCA's Monthly Report: 2nd Quarter of 2010

July 2010

Inflation deceleration and Risks to economic recovery.

The quarterly report from the Executive Secretary of the Central American Monetary Council (SECMCA) focuses on the region's inflation and recovery prospects.

Inflation, measured by year-on-year change in consumer prices, slowed in the second quarter of 2010 to 4.9%, compared to 2.9% in June 2009. This level is within the target limits set by the region's central banks.

Costa Rica: Inflation Not Caused by Growth

November 2010

The variation of IMAE in September was 3.08%, highlighting the slowdown trend observed since February.

February was the month which recorded the highest figure of the year: 6.30%.

However, this indicator has been declining significantly and is converging to the values observed (3.08%) since June of this year, indicating a significant stabilization.

Economic Activity Increases in Costa Rica

November 2009

In October, the Monthly Economic Activity Index (IMAE), grew for the eight consecutive month, driven by a 0.31% monthly increase.

Year-on-year the index still reflects an economic contraction, but at a lower pace. When compared with the last year, IMAE dropped 0.1% in October, an improvement over February, when the variation was 4.8%.

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