During February 2021, economic activity fell 4.7% in year-on-year terms, a drop that evidences that the economic crisis caused by the covid-19 outbreak continues to affect Costa Rica.
According to the Central Bank of Costa Rica (BCCR), as per the cycle trend series of the Monthly Index of Economic Activity (IMAE), the inter-annual variation of production reached its lowest point in June 2020, at which point it began a gradual recovery process.
The World Bank predicts that by the end of this year Panama and the Dominican Republic will be the economies of the region that will grow the most, and the countries that will report the lowest increases in their production will be Costa Rica and Nicaragua.
After the region's economies were considerably affected in 2020 by the sanitary crisis generated by the Covid-19 outbreak, the outlook of international organizations for 2021 is encouraging.
During 2020 in all countries of the region, construction activity decreased considerably and Central American cement imports stagnated, this adverse scenario is explained by the economic crisis generated by the pandemic.
The construction industry statistics system, which is part of the interactive platform "Construction in Central America" of CentralAmericaData's Business Intelligence area, compiles the most important industry data for each of the countries in the region.
During January of this year, production in Costa Rica decreased 4.8% in year-on-year terms, a decline that is explained by the economic crisis resulting from the pandemic caused by the outbreak of covid-19.
In January 2021, the production of manufacturing and computer services grew 1.9% and 0.7%, respectively, in year-on-year terms. In contrast, the rest of the economic activities showed drops in their level of activity in relation to January 2020, states a report by the Central Bank of Costa Rica (BCCR).
Twelve months after Central America began a health and economic crisis triggered by the covid-19 outbreak, Guatemala was the fastest recovering economy and Panamanian economic activity is the slowest to return to pre-pandemic levels.
In March 2020, the first cases of covid-19 began to be detected in the countries of the region. The highly contagious disease, which at that time had already claimed the lives of thousands of people around the world, forced Central American governments to establish mobility restrictions.
In December 2020, the Monthly Index of Economic Activity reported a year-on-year variation of -5.1%, a drop that is explained by the restrictions imposed due to the covid-19 outbreak.
Since the calculation of the Monthly Index of Economic Activity (IMAE) series began in 1991, the average annual gross production, measured by the IMAE, has only fallen on two occasions, specifically in 2009 and 2020.
The World Bank has improved economic growth projections for all Central American economies for 2021, with Honduras, El Salvador and Panama having the most promising forecasts.
In June 2020, when the health and economic effects of the pandemic that caused the covid-19 outbreak were beginning to be reported, the World Bank predicted that in 2021 Nicaragua's Gross Domestic Product would decrease by -1.6%, but in a January 2021 publication it projected that the drop would be -0.9%.
Because of the fall in economic activity and the restrictions imposed to contain the spread of covid-19, businessmen in Costa Rica and Panama predict that the process of economic recovery will not be completed in the near future.
In this crisis scenario generated by the covid-19 outbreak, the Costa Rican economy does not show clear signs of recovery, since during November 2020 the Monthly Index of Economic Activity reported a year-on-year fall of 6.2%, a decline similar to that reported in October, when it was 6.3%.
Strengthening the confidence of economic agents through a solution to the problem of public finances and moving forward with the process of vaccinating the population are key factors for the Costa Rican economy to recover quickly in the new year.
The spread of covid-19 and the restrictions imposed at the local and global levels severely affected most of Costa Rica's productive sectors, to the extent that the unemployment rate climbed to historical levels, several businesses were closed and economic activity fell sharply.
Although the end of the year holidays is a threat to Central America for a second wave of covid-19 infections, it is expected that total closures will not be decreed since there are currently effective health control options, and less costly for the economy.
When the first cases of covid-19 were reported in the region in March 2020, most governments decided to paralyze a large part of productive activities and decree home quarantines.
According to the Central Bank, this year the Costa Rican economy will contract by 4.5%, an estimate that would be optimistic in the current context of fiscal and economic crisis, uncertainty, distrust and lack of decisions in the transcendental issues facing the country.
The recent results of local production and the new estimates of global economic activity have allowed the Central Bank of Costa Rica (BCCR) to revise its economic growth projections for the country: the economic contraction for 2020 is expected to moderate to 4.5%, from the 5.0% predicted in the 2020-2021 Macroeconomic Program Review of last July. For 2021, an annual increase in production of 2.6% is projected, a figure 0.3 percentage points (p.p.) higher than that also announced in July.
As of June, Central American economies began to show signs of incipient recovery and as of August, Guatemala, Nicaragua and Costa Rica registered the smallest drops in their levels of economic activity.
Since March of this year, the region has faced a severe economic crisis generated by the outbreak of covid-19. The strict quarantines decreed, the closure of borders and commercial establishments, ended up damaging the dynamism of productive activities.
After reporting in June a 7% year-on-year variation, in July the monthly index of economic activity continued to fall, registering an 8% drop with respect to the same month in 2019, a decrease that is explained by the economic crisis affecting the country.
The lower activity, which is due to the impact that the pandemic has had in Costa Rica and around the world, is seen in the five major economic activities (agriculture, manufacturing, construction, trade and services) that make up the monthly index of economic activity (IMAE).
At the height of the pandemic and economic crisis, the Costa Rican president announced, on a national chain, an economic recovery plan with no clear direction, no assigned leaders and no concrete actions.
In the message broadcast on the night of July 12, President Carlos Alvarado vaguely explained part of the plan to be adopted to overcome the health and economic crisis generated by the spread of covid-19.
Understanding the economic environment the company is facing, generating projections in real time and having the opinion of external consultants to the organization, are some of the strategies that could help companies in times of low sales.
In Central America, during the first half of the year, some economies reported declines in their productive activity.
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