Construction of City Mall project in Alajuela, to be the largest mall in Costa Rica and Central America when it opens in October.
Construction of City Mall project in Alajuela to be the largest mall in Costa Rica and Central America when it opens in October.

(QCOSTARICA) A decline in foreign trade has been offset by the 4.33% increase in domestic consumption resulting in a GDP growth of 2.68% in the first quarter.

Consumption by the Government and families have seen the same upward trend since 2013, a situation that compensates for the decline in private investment in the last quarter, which is maintaining a downward trend, extending a decline that has already been going on for six quarters.

In an article in, Olivier Castro, president of the Central Bank (Banco Central de Costa Rica – BCCR), said that “… a downward adjustment is forecast for growth of the Costa Rican economy this year”, which is supported by economists and businessmen who “… doubt that GDP will be maintained further if the external sector stays ” resentful” and with negative changes.”

“… Luis Mesalles, director of the Costa Rican Union of Chambers and Associations of Private Enterprises (Unión Costarricense de Cámaras y Asociaciones del Sector Empresarial Privado  – Uccaep), it is difficult to believe that domestic consumption will maintain its growth and manage to ‘carry’ the rest of the economy with it. ”

Lower production means it will be very difficult to lower the unemployment and underemployment. Also, the real income of people can not grow much, ” said Mesalles.

José Luis Arce, an economist at the Economic and Financial Advisers (Consejeros Económicos y Financieros – CEFSA), said the pessimism of entrepreneurs and families has lowered investment and will reduce the rise in GDP in the future.

Production growth in the first quarter was led by construction, financial services and insurance, plus transport, storage and communications.

“We will have an industry that will continue to slow the rest of the year and with a slight improvement at the end of 2015,” said Francisco Gamboa, executive director of the Chamber of Industries ( Cámara de Industrias).

Agriculture was the only Costa Rican productive sector that had a negative production,  falling 1.4%.

Alberto Franco,  economist at Ecoanálisis, said that the climatic effects of  El Niño will result in lower production for the rest of the year. Banana and pineapple are among the most affected by the rains, while livestock has been hit by droughts in Guanacaste.


Stay up to date with the latest stories by signing up to our newsletter, or following us on Facebook.