When Confidence Disappears

Business confidence in Costa Rica fell in the third quarter to levels reported in 2009, a year marked by the global financial crisis, and in consumer’s pessimism has also rebounded, because no effective and short-term measures are perceived that tend to reactivate the national economy.

Thursday, September 19, 2019

Businessmen are not very optimistic about the development of their businesses in the coming months, as comparing today's Business Confidence Index (IEC) (5.3) with that of a year ago (6.2) shows a significant decline. In addition, this indicator accumulates 10 quarters of gradual slowdown, reported the Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP).

According to the Quarterly Business Survey "Business Pulse", for July to September and conducted by the UCCAEP, there is reported a decrease of almost 20% in the Business Perception Index (IEP) which today is at 4.8%. See full results of the Survey.

The report states that "... It is the first time in almost five years, that this indicator is below the level of 5.0, that means that businessmen already indicate that there is a deterioration in their activities, particularly in some sectors where the decline in activity is sustained, for example, the agricultural sector has 10 months growing negatively, the commercial sector has five months and construction four months."

The document adds that "... only 13% of businessmen believe that the real growth of the Gross Domestic Product (GDP) will remain as indicated by the Central Bank, in contrast to a rather marked pessimism since almost 65% believe that it will be less than 2%.

In the field of hiring and layoffs, only 1 out of 4 businessmen said they want to hire permanently and only 8% say they will make layoffs on their payroll.
"

Consumers are the same situation, because in the country the level of confidence is recorded to August 2019, along with November 2018, are the lowest reported in the last 17 years.

The increase in pessimism to the national economy by consumers is partly due to the perception that the personal economic situation tends to loss in purchasing power, which combines with an expectation of increased price level.



More on this topic

Uncertainty Persists, Even with Fiscal Reform

August 2019

In Costa Rica, the Central Bank predicted that confidence would again prevail among businessmen and consumers once the tax reform was approved, but that has not been the case.

In December 2018, after a year of proceedings in Congress and after having been reviewed in the constitutional instance, was approved by the Assembly of the country the file that corresponded to the Law of Strengthening Public Finances.

Business Expectations Fall 9%

July 2019

In Costa Rica, between the second and third quarters of the year, the Global Expectations Index reported a decline of 9%, explained by a deterioration in the prospects of all productive sectors.

Regarding the previous quarter, the fall in the general optimism of businessmen originates in the weakening of the indices of services, manufacturing, trade and construction and to a lesser extent, agriculture, explains the report prepared by the University of Costa Rica.

Best Business Outlook for the 2nd Quarter

April 2019

In Costa Rica, between the first and second quarter of the year, the Global Expectations Index reported a 5% increase, explained by an improvement in the prospects of almost all productive sectors.

From the total number of businessmen who replied to the survey, approximately 70% do not anticipate changes in the hiring of labor, 13% expect increases and 17% expect reductions, according to the report prepared by the University of Costa Rica.

Costa Rica: Confidence in Economy Drops Lower

April 2015

The confidence of the guild of merchants in the economic situation and future prospects has fallen to the lowest level in five years.

From a statement issued by the Chamber of Commerce in Costa Rica:

Companies in the commercial sector started the year with little optimism and demonstrated their distrust of the economic situation.

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