Tuesday 27 September 2022

Consumer confidence improves slightly in early 2021

Greater flexibility in the vehicle restriction and other regulations due to covid-19, as well as the start of vaccination in Costa Rica, are factors that could have impacted the improvement of the score

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27 September 2022 - At The Banks - BCCR

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QCOSTARICA – Consumer pessimism decreased slightly for February 2021, compared to November of last year, however, uncertainty around the economy remains high and the exit from this trance is still slow.

Greater flexibility in the vehicle restriction and other regulations due to covid-19, as well as the start of vaccination in Costa Rica, are factors that could have impacted the improvement of the score

That is the conclusion by the results of the Consumer Confidence Index (ICC), carried out by the School of Statistics of the University of Costa Rica (UCR), of data from the last three months that ended in February 2021.

In that period, consumer confidence measured with this indicator increased to 36.7 points (on a scale of zero to 100); 1.9 points more than the three months ended in November 2020 (34.8).

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Although the score increased, the researcher and coordinator of the survey, Johnny Madrigal, assured that it continues to be low and that it reflects the pessimism that remains among Costa Ricans.

“Confidence is timidly strengthening, but pessimism on a national scale remains,” he stressed.

The index has been recovering since August 2020, one of the months with the lowest scores (28.3) since 2002, a fall immersed in the crisis due to the coronavirus pandemic. The ICC returned, in February 2021, to the same point it had a year ago (36.7), just before the national health emergency.

Greater flexibility in the vehicle restriction and other regulations due to covid-19, as well as the start of vaccination in Costa Rica are factors that could have impacted the improvement of the score in recent quarters.

Regarding expectations for the next 12 months, the survey highlights some factors that could be affecting confidence.

To begin with, 72% of the people surveyed expect an increase in the price of fuel.

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59% expect increases in the exchange rate and households with the capacity to make discretionary expenses is 29% (it was 33% a year ago and fell to 21% in August 2020).

The results of this survey cover one year since the start of the covid-19 pandemic in the country. Madrigal stressed that the effects of the virus were what they did was “stall” the low levels of consumer confidence.

Economic policy outlook

As part of the results, it is shown that the perception of the people surveyed regarding the Government’s economic policy has deteriorated in recent months.

The performance rating as “good job” decreased from 16%, in August 2020, to 7% in February 2021, while the perception of “poor job”  in economic matters increased from 50% to 63%, in that same period.

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On the other hand, more positive expectations are reported in the personal economic situation: improvements are expected in family income since those who indicated that they expect lower income changed from 35%, in November 2020, to 24% for February of this year.

Furthermore, the percentage of people who expect losses in purchasing power for 2021 decreased from 45% to 34%.

However, 52% of respondents expect increases in interest rates on loans for the next 12 months.

The survey also shows that consumer confidence and people’s perception of the valuation of the moment (good or bad) for the purchase of a house for those who affirm that these are “bad times” fell from 79% to 68%.

In August 2020, those who considered that it was not the time to buy a property reached 90%.

The February 2021 survey took in the response of 729 people nationwide aged 18 and over.

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