luc_intel_009(QCOSTARICA Via Bloomberg) — Costa Rica should see accelerating economic growth in the second half after the country struggled to recover from Intel’s closing of export facilities last year, Central Bank (Banco Central) President Olivier Castro said.

The US$50 billion economy is rebounding from bad weather that hit crop production and the closing of manufacturing plants by Intel Corp., Castro said in a May 30 interview in Cancun, Mexico. Public works projects could help spur growth after 11 consecutive months of deceleration, he added.

“We foresee an acceleration of public works in the second half that could help mitigate the drop,” Castro said, adding that the country is suffering from the “Intel effect.”

President Luis Guillermo Solis has focused on drumming up fresh investment for Costa Rica, which won praise from economists in the 1980s and 1990s for establishing itself as a stable hub with a highly-educated, lower-cost workforce and access to U.S., Asian and European markets.

Solis last month ended a 10-day tour of four U.S. cities, winning promises of investment and new jobs from companies including Dole Food Co. and Bridgestone Corp. The jobs will help address an unemployment rate that rose to 10.1 percent in the first quarter from 9.8 percent a year earlier.

In a May 1 speech, Solis said the government has tripled the country’s public works portfolio in 2015 to US$2.28 billion, including new highway and port expansion projects, some of which are expected to begin this year.

Castro said the nation’s currency, the colon, could strengthen further after June as more foreign currency flows into the economy. Lower energy prices have pushed inflation below expectations, he added, giving policy makers space to cut the benchmark interest rate to 3.75 percent in May, down 150 basis points from the start of the year. Consumer prices rose 1.8 percent in April from a year earlier.

“There is a window here,” Castro said. “We don’t think it will be permanent. At some point we expect the inflation rate to adjust to 3 percent.”

Article originally appeared on Bloomberg.com


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