More Debt, Less Growth

According to the Central Bank, Costa Rica's economy could grow 3.2% this year, less than was initially expected, and the fiscal deficit could reach 7.2% of GDP.

Monday, July 23, 2018

In its revision of the Macroeconomic Program 2018-2019, the Central Bank of Costa Rica (BCCR) foresees that this year's GDP growth will be 3.2%, below what was estimated in the Program presented at the beginning of the year, when the monetary authority projected growth of 3.6% at the end of the year. 

In addition, the BCCR estimates that this year there will be lower dynamism in loans granted in local currency, a greater fiscal deficit and an inflation rate within the entity's target range.

From a statement issued by the BCCR:

The Central Bank of Costa Rica's (BCCR) decision to announce the adoption of an inflation targeting monetary scheme on January 31st culminated the transition process begun in 2005. This formalized the policy strategy that the Bank has been following for several years and whose actions allowed inflation to be gradually reduced, going from double-digit values to levels close to those shown by our main trading partners.  

It should be noted that, in a consecutive manner, inflation has been less than 4% in the last 41 months (using information as of June 2018), a behavior similar to that of the period between August 1964 and December 1967.  

However, even when price stability contributes to sustained economic growth, it is not enough. An environment of sustainable public finances and an institutional framework that promotes improvements in the productivity of production factors and, consequently, in the competitiveness of the national economy, is also indispensable.   

Read full report (in Spanish).

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