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Costa Rica: Country Economic Forecast: 20 Jun 2013

5 Pages Oxford Economics June 20, 2013 SKU: OFE5077378

The latest economic activity index shows that the economy continued to slow in Q1, and manufacturing fell sharply on the month in April. The central bank president has announced that an error had led to earlier manufacturing data – and therefore overall growth – being overstated. We have cut our GDP growth forecast for this year to 4%, from 4.2% previously, and may lower it further in the coming months depending on the effects of these data revisions. Interest rates for borrowers have fallen from 9.2% at end 2012 to 6.7% in May, but credit growth to the private sector has also slowed, to 11.7% in Q1 from 12.7% last year. This is expected to have little effect on consumption but may help to limit price rises. CPI inflation fell to 5.3% in May after averaging 6.2% in Q1, bringing it closer to the central bank’s target (of 5% +/-1%). The currency has been largely unaffected by recent exchange rate swings seen in some other countries in the region, in part a reflection of intervention by the authorities. This has helped to secure a steady – if gentle – rise in exports, which increased by 3% in value terms in Q1. Exports are expected to grow at roughly this rate for the rest of this year before picking up more strongly in 2014 as world trade recovers. While President Laura Chinchilla cannot stand for re-election in February 2014, the fair economic performance in prospect is likely to bolster her ruling PLN and its candidate, San Jose mayor Johnny Araya.

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Costa Rica: Country Economic Forecast: 20 Jun 2013

Oxford Economics
June 20, 2013

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