The risks are: uncertainty about sustainability of public finances, increasing dollarization of the loan portfolio, and inflationary pressures from excess liquidity.
In its commentary on the national economy No. 5-2016 of May 2, 2016, the Board of the Central Bank of Costa Rica said:
"... The Central Bank reiterates the existence of risks to macroeconomic stability.
In its review of the macroeconomic program for 2014-2015, the Central Bank projects, as the most likely scenario, an annual inflation of around 6% at the end of 2014, and slightly less than 5% by the end of 2015.
The document issued by the Board of the Central Bank of Costa Rica places emphasis on keeping the inflation target at "4% with a tolerance of ± 1 percentage point for the remainder of the period from 2014 to 2015."
The Central Bank has lowered its inflation forecast to 4% for 2014 and projects increases in interest rates in colones and dollars.
From a Communiqué from the Central Bank of Costa Rica:
The Board of the Central Bank of Costa Rica, in Article 4 of the 5633-2014 session of January 29, 2014 approved the 2014-15 macroeconomic program.
This program is intended to inform the public on the performance of key macroeconomic variables during 2013, as well as the goals, policy measures, assumptions and projections for the next two years, consistent with the priorities and subsidiaries assigned in Article 2 of the Organic Law (Law 7558).
Experts agree that 2012 will be a year of slight growth, low inflation and devaluation.
The 30 economists consulted by the weekly publication El Financiero, forecast a GDP growth of around 3.3%, mainly driven by construction and trade sectors through domestic consumption. Interest rates will remain at levels similar to 2011, while the exchange rate could vary between 3 and 6%, reaching between 520 and 540 colones to the dollar at the end of 2012.
In February, inter-annual economic growth reached 2.9%, while the International Monetary Fund projected 4.3% for 2011.
Someone is wrong: either the IMF or reality. But the latter is the perception also shared by most economic agents in the country. If there isn't substantial change, IMF projections will miss by a large margin.
High production costs, which reach as much as 40% according to Mónica Araya, president of the Chamber of Exporters, are suffocating companies, and the worst culprit is the appreciation of the local currency versus the dollar.
Aldesa analyzed the Macroeconomic Program 2011-12, by the Central Bank of Costa Rica, with projections for 2011.
In our view, one of the most important elements of the program and to which attention should be paid, has to do with projections for public finances.
Given the relative similarity of economic conditions between 2010 and 2011, the most important is the role played by the Central Government in managing the growing fiscal deficit.
The slow opening of the telecommunications market and the exchange rate are key factors in the decline in business confidence over the previous quarter.
• Perception and business confidence down for the second consecutive semester
• UCCAEP urges a national agenda to boost productive activities
Most businesses continue to show caution according to the most recent Trust Perception Index, measured by the most recent "Business Pulse" of the Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP).
Central America may be directly impacted by the slowdown in the recovery of the world economy.
For the time being, the region's measures of external and internal demand do not seem affected by the threat of lower growth rates for the economies of partner developed countries. Some central banks had raised their expectations but, in view of the risks, they are likely to revise their growth predictions back to original levels between 2.0% and 2.7%.
Monthly Index of Economic Activity (IMAE), exports, remittances, international reserves, exchange rates, inflation, tax collection, banking system, foreign investment, tourism and outlooks.
Oscar E. Mendizábal, editor of the Blog “Desde Guate” (From Guatemala), gathers and analyses the main factors influencing the Central American economy (except Panama) during the first six months of this year.
2010 is looking better than 2009, but it is necessary to keep an eye on cash flow, and insist on containing expenses.
An article by Édgar Delgado Montoya, based on a survey conducted among 40 Costa Rican analysts, gives suggestions for the new year, and can be extrapolated to the rest of Central America.
The projection in which analysts agreed the most is that developed nations will grow at a very moderated pace, and the same will happen with domestic economic growth, so local and external sales will grow very little.
Growing fiscal deficit could increase the Treasury's participation in the securities market.
Even though economic activity dropped at a lower pace, Costa Rica's economy is still in recession.
Moderation in the contraction rate of the Monthly Economic Activity Index (IMAE) - Economic activity in Costa Rica is still contracting when compared to last year's levels, even though the pace has reduced in the last months.
A survey of economic forecasts shows that the average inflation rate expected for Costa Rica over the next 12 months is 11.7 per cent. A currency devaluation of 3.5 percent is also expected.
The survey is carried out each month by the Central Bank to measure inflation and exchange rate expectations by analysts and experts. The survey covers businessmen, academics and consultants.
As pressure build up on Costa Rica's money markets, the only way seems to be up for the US dollar.
The nation's current account balance is showing a large deficit, and flows of investment – both financial and direct – are down. "There's a combination of factors behind the rise in the dollar's exchange rate," said Andrés Víquez, manager of the Aldesa brokerage.
A period of low interest rates in Costa Rican colons appears to be coming to an end as analysts foresee increases in the coming months.
Some banks are already using higher lending rates to slow down the growth in credit. "Higher rates will give the central bank its most effective weapon in controlling inflation," said Fernando Estrada, a trader with Mercados Internacionales.