Economic Challenges Ahead

The pessimism expressed by consumers in Costa Rica and the constant deterioration of business expectations in Guatemala reflect part of the complex challenges faced by Central American economies this year.

Thursday, February 28, 2019

A report prepared by the School of Statistics of the University of Costa Rica (UCR) shows the negative trend that come showing the economic expectations, because between February 2018 and the same month of 2019, the Consumer Confidence Index (ICC) fell 15%.

Although comparing the ICC figures reported between November 2018 and February 2019, a slight improvement is shown, with a 23% increase in the index, consumer expectations remain pessimistic.

See "Economic Outlook for the New Year"

Johnny Madrigal, UCR researcher, told that "... It's quite likely that the passage of the tax reform has made consumers feel less pessimistic. Confidence increased equally across all population groups, i.e. by age, sex and education levels. However, this rebound is not enough to be considered 'optimistic'."

The article adds that "... When consulting consumers about their current economic conditions, 38.3% think they are worse off now than they were a year ago. While 60.3% think it's a bad time to buy household goods. Regarding their future expectations, 37.6% say that economically they will be worse within a year, 50.6% think that the economic situation of companies will worsen next year and 59.1% project that in the next five years the country will have periods of crisis."

Also see "Low Business Confidence at the Beginning of the Year"

Costa Rica is not the only country in the region that began the year with adverse expectations, since in Guatemala, after the Confidence in Economic Activity Index reported a 8% year-on-year increase in December 2018, it fell 3% in January compared to the same month in 2017.

The Bank of Guatemala reported that "... In January 2019, the level of the Confidence Index of Economic Activity was at 47.76 points, lower by 2.15% regarding the registered in December 2018 (48.81 points) and lower by 2.97% to the registered in January 2018 (49.22 points)."

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