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.
The financial sector will play a key role in the performance of consumption. Banks predict an increase in loans granted in 2012 in line with the pace in 2011, 13%, while the Central Bank estimates that the number will be located in the vicinity of 9.3%. The more loans these entities manage to grant, the greater the boost to domestic activity will be.
Externally, the outlook is bleak. Europe is very close to recession, while the U.S. and China have mild growth prospects. Most economists believe that Costa Rican exports of will have a slight increase, while FDI could be maintained by the telecommunications and insurance sectors.
In terms of inflation, there is a consensus that it can be controlled without major problems, being between 6% and 7% at the end of the year. If domestic demand does not grow, then neither should prices, argues economist Luis Mesalles.
In the middle of this somewhat pessimistic outlook is the high fiscal deficit. In Mesalles's view, if a solution is not found to the current level of 5.5% as a percentage of GDP, there will be very negative consequences in the medium term, especially if the global economy moves into recession.
"Although in 2012 economic growth and employment is worrying, fiscal deficit will remain the main point of attention for economic policy. Depending on how it is resolved, there will be consequences for growth, inflation, the exchange rate and interest rates", reports Elfinancierocr.com.
If the tax reform is approved, all forecasts would change. Economists agree that growth would be even lower, and nearly half also agree that inflation would be higher. For the long term, respondents showed divided opinions: half believe that the package will make the economy grow, while others believe that it will have no impact.
Source: elfinancierocr.com
More on this topic
January 2011
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.
March 2009
Fitch expects that Latin America’s real GDP will contract by 0.9% in 2009, with Brazil’s economy stagnating at best and Mexico contracting by over 2%.
Latin American economies have recoupled with the crisis in the developed economies. Since September 2008, Latin American countries have been buffeted by stronger external headwinds, as evident from the fall in regional currencies and stock markets and from widening bond spreads.
December 2011
The Central Bank of Costa Rica (BCCR) has announced that the country will close 2011 with a growth rate of 4% and a fiscal deficit equal to 5% of GDP.
Rodrigo Bolanos, president of the BCCR said at a press conference that the growth of 4%, is lower than last July’s projection of 4.5%.
July 2009
Fitch Ratings has affirmed Guatemala's local and foreign currency Issuer Default Ratings (IDRs) at 'BB+'. The Rating Outlooks on both ratings are Stable.
Guatemala's track record of macroeconomic stability, low public and external debt burdens, as well as the government's solid commercial debt repayment history continue to support the sovereign's ratings.
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