The State of the Nation 2018 Report explains that during 2017 and the first months of 2018 the progress of Costa Rica's economy has been adverse and, in the short term, the prospects for economic opportunities, solvency and stability are negative.
Most of the drivers of Costa Rica's economy have declined in recent months, resulting in Costa Rica going through a period of multiple economic and political risks.
In 2017, the Costa Rican economy experienced a deterioration in most of its indicators: lower real GDP growth, deceleration of internal and external demands, reduction in jobs, higher prices, increase in interest rates and greater deterioration of public finances. This section follows the main economic indicators in 2017 and the first months of 2018.
The Report presents five approaches that synthesize the current situation in Costa Rica.
1. In 2017 and 2018, the strategy applied by successive governments in the last decade, which tried to expand public spending from a rapid, accessible and cheap indebtedness and without a correlative tax reform, became unfeasible.
2. The economic slowdown reinforced the structural disconnection between production and employment, thereby reinforcing barriers to facing poverty and the deterioration of social coexistence.
3. Persistent social and territorial disparities resulting from high levels of inequality have led to the emergence of areas of social exclusion and new institutional challenges.
4. The recurrent practice of rejecting the criteria of environmental sustainability in the commitment to use the territory and its natural resources has created problems of mobility and risk, and the solution implies high costs that the country is increasingly unable to face.
5. An electoral process with dynamic and atypical results increased the complexity of political governance, and so the system has begun to provide adaptive responses whose results and effectiveness are still uncertain.
All in all, the country is living in a period of great care. It faces economic, social, environmental and political risks, in addition to external challenges caused by several recent events.
As a result of the economic slowdown and the imbalance in public finances, Costa Rica faces a complex and high-risk future, in which the margins for action and maneuver will be increasingly limited.
The State of the Nation 2019 report explains that the economic slowdown and imbalance in public finances created a scenario of great complexity and risk, both economic and political, which aggravated the structural weaknesses or "blind spots" of the national development style.
Fitch Ratings kept in B+ with a negative outlook, the sovereign debt rating, arguing that "the weaknesses in public finances are reflected and the political stagnation has prevented the timely approval of reforms that address these problems."
The new fiscal rule has not been approved, and the Congressional authorization requirement for foreign loans periodically restricts Costa Rica's financial flexibility, is another of the risk qualifier's arguments.
According to Fitch Ratings the reelection of Daniel Ortega as president of Nicaragua means stability in the country's economic policies.
EDITORIAL
Stability and economic and political continuity is what Fitch Ratings envisages for Nicaragua after the outcome of the presidential elections last Sunday, in which President Daniel Ortega was declared the winner, with 70% of the vote, according to a report by the Supreme Electoral Council.
The Central Bank has confirmed the widespread perception of economic slowdown, with growth forecast for this year falling from 3.4% to 2.8%.
The president of the organization confirmed that an excess of dollars in the foreign exchange market explains the behavior of the exchange rate, which has remained relatively low and stable in recent months.
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