Construction: Complicated Present, Uncertain Future

Due to the suspension of several projects and the political, economic and fiscal situation in Costa Rica, it is expected that the economic activity of the construction industry will close the year in the red and for 2021 a scenario of much uncertainty is predicted.

Tuesday, November 24, 2020

According to data from the Central Bank of Costa Rica (BCCR), the economic activity of construction began to report negative year-on-year variations since December 2018.

Official reports indicate that in June 2019 the fall in construction activity was 17.3%; however, in the following months the industry showed signs of recovery, but in this context of the spread of covid-19 a new downward trend was reported and in September 2020 the fall was 13.5%.

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According to businessmen in the sector, for the industry to begin to recover from two years of unfavorable behavior, incentives are needed, such as the generation of the required conditions to send signals of confidence to investors and consumers.

Directors of the Costa Rican Chamber of Construction (CCC) have insisted on the need to work on reforms to modernize institutions such as the Aqueduct and Sewer System and the National Environmental Technical Secretariat (Setena). If this objective is achieved, it could favor the industry's recovery process.

Esteban Ancon, president of the JAC, told Elfinancierocr.com that "... another point on which we have been categorical is that public works must continue. We know that the pandemic has further affected the critical situation of public finances, but it is imperative that the government is able to distinguish the great difference between the terms 'spending and investment."

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Ancon added that "... the inefficient expense only contributes to the unjustified increase of the fiscal deficit, while the investment in public work produces reactivation in the productive sector, and with it produces the jobs."

The situation of some public infrastructure projects is not at all encouraging, since due to the economic crisis that caused the pandemic, the income of the Costa Rican Social Security Fund was reduced, which puts at risk the financing of 120 construction projects that together total an investment of approximately $1,521 million.

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