During the February to April 2021 quarter, the unemployment rate rose to 17.3%, a level that is lower than the 18.7% reported during the first three months of the year, a decrease that is reported in the context of the economic reactivation.
For the quarters between February, March and April 2020 to the last available quarter, the country has experienced significant impacts in the main indicators, as a result of a higher participation of people and greater access to the labor market due to the lifting of some sanitary measures arising from the Covid-19 sanitary emergency, informed the National Institute of Statistics and Census.
After the Legislative Assembly ratified the country's accession to the Organization for Economic Cooperation and Development, the business sector is of the opinion that this will help consolidate the institutional reforms needed to make the State more efficient.
The Assembly informed that by approving in the second debate the bill 22.187, which contains the agreement on the terms of accession, the deputies gave the green light to Costa Rica's accession to the Organization for Economic Cooperation and Development (OECD).
In order to mitigate the effects of the pandemic, local authorities decided that from Monday, May 3 through Sunday, May 9, all commercial establishments operating in the cantons of the Central Region and which are not classified as essential, must close to the public.
These establishments will be able to operate under the non-face-to-face modality by means of home delivery or self-service. The rest of the country will not be affected by closures, informed the Presidency of Costa Rica.
Reducing costs and barriers to foreign trade in Central American economies is key for the region to overcome the economic recession caused by the outbreak of Covid-19.
A report prepared by the World Bank explains that boosting economic activity and employing a higher percentage of the labor force are objectives that can be achieved through reforms that strengthen the private sector and attract investment.
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.
For the mobile quarter from December 2020 to February 2021, the unemployment rate in the country decreased to 18.5%, a proportion that is slightly lower than the 19% reported for the period from November to January last year.
In this quarter, the unemployed population was 452 thousand people, an increase of 142 thousand people compared to the same mobile quarter of the previous year, informed the National Institute of Statistics and Census (INEC).
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. Both cases coincide with world crises, but the impact has been much more severe for Costa Rica in the case of 2020, according to an official report.
Strengthening trade between the US and the region, fighting corruption in the Northern Triangle and reducing illegal migration flows, are some of the axes on which Joe Biden, the US president who has been sworn in, is expected to focus.
Biden, representative of the Democratic Party and winner of the last US elections, whose results were close, arrives at the White House to replace Donald Trump.
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%.
At the end of 2020, Honduras, Nicaragua, Guatemala and El Salvador remained at the bottom of the Human Development Index ranking, while Costa Rica and Panama were better evaluated.
The report entitled The Next Frontier, Human Development and the Anthropocene, which was published on December 15, 2020 at the global level, updates the Human Development Index (HDI) that is calculated by the United Nations Development Program (UNDP).
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. These actions focused on containing the advance of the virus caused a severe economic crisis in all countries.
After the IMAE reported year-on-year variations of -9% and -8%, respectively, in July and August, during September the Costa Rican economy continued to recover from the impact of the health crisis by reporting a 6% drop in production.
The Central Bank of Costa Rica (BCCR) reported that the economy is in the process of recovery, as a result of the process of reopening and gradual lifting of sanitary restrictions, which were imposed following the outbreak of covid-19. However, the upturn so far is not enough to fully recover the loss in production of the previous quarter, so the level of activity is still lower than in the last quarter of 2019.
The Costa Rican government is facing a complex scenario, since by not achieving consensus to access international loans, it will be forced to seek domestic funding sources, which would put pressure on the exchange rate and interest rates to rise.
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