Uncertainty Slows Down Private Credit

Explained in part by doubts about the economic future in the short term, in Costa Rica credit granted to companies and individuals went from growing at an annual rate of 8% in January to 4% in June of this year.

Friday, September 28, 2018

According to figures from the Central Bank of Costa Rica, in the first six months of the year credit to the private sector has reported a clear downward trend, since in January the amount registered amounted to $34.072 billion and the increase compared to the same month in 2017 was 7.9%. 

However, from February to June, the year-on-year increase has decreased, given that there are variations for each month of 7%, 6%, 5.2%, 4.4% and 3.8%, respectively. 

In relation to the decline in the growth of credit to the private sector, economist Luis Diego Herrera, analyst at the trading firm Acobo, told Crhoy.com that " ... the demand for credit is not only determined by the rates of interest, because uncertainty is high. In this way, factors linked to the interests would have - at the moment - little influence in the decision to take on new debt."

Herrera added that " ...'In general, much of the uncertainty is related to what is going to happen with public finances, the approval of the fiscal reform project and a series of measures that the country must take in order to move it away from the path that now has a high deficit with a high debt'."

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