Wednesday 8 February 2023

Costa Rica’s economic activity shows rebound

The monthly index of economic activity has three continuous months of acceleration and reached an increase of 2% year-on-year, last September

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8 February 2023 - At The Banks - BCCR

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Costa Rica’s economic activity shows a rebound in the last three months, according to the last series of the Indice mensual de actividad económica (IMAE) –  Monthly economic activity index – published, Monday (November 11) by the Banco Central (Central Bank).

Central Bank President Rodrigo Cubero, in a press conference on Tuesday, argued that the Costa Rican economy shows signs of recovery in the last four months.

The Central Bank says that in September 2019, the index increased by 2% compared to the same month of the previous year, according to the cycle trend series. This result is greater than 1.7% in August, 1.4% in July and 1.2% in June.

“The IMAE is a monthly indicator that attempts to monitor the evolution of the volume of production of goods and services in the economy, in the short term,” explained Henry Vargas, director of the Department of Macroeconomic Statistics of the Central Bank.

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To calculate it, company surveys and administrative records from public institutions are used. The cycle trend means that seasonal and irregular factors that affect production are isolated.

In a press conference Tuesday (November 12) afternoon, Central Bank president Rodrigo Cubero, confirmed that the country’s economy began a recovery process

Cubero explained that the improvement in the IMAE occurred due to a combination of factors, highlighting the dynamism of the export sector, mainly from companies located in the free zone; and an increase in the importation of goods for production and final consumption.

According to the information published by the Central Bank, the companies of the definitive regime, which are those that do not have tax incentives and sell mainly for the local market, increased only 0.8% in September 2019 compared to the same month of 2018 (year-on-year variation ).

On the contrary, those of the special regime, which includes Free Zones and Active Improvement, which have tax incentives, increased 12% in that month.

By economic activity, agriculture, which had had year-on-year falls until July, showed a year-on-year increase of 0.2% and in September of 0.8%.

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The manufacturing industry increased 3.3% year-on-year in September 2019, with an acceleration trend (each month it grows year-on-year more than the previous month).

However, there are still falling activities, such as construction and retail, but the reductions are smaller every month.

Construction fell in September 2019 by 12.9% compared to the same month of the previous year, but the fall was a little less than in previous months. In June, 17.3% had fallen; in July, 16.5% and in August, 14.5%.

Retail fell 0.5% in September of 2019 compared to the same month of 2018. The fall was slightly less than in August, which was 0.6%, and in July it reached 0.7%.

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On the other hand, financial and insurance activities continue to show little growth, just 2.2% in September.

The second fastest-growing activity is teaching, with an increase of 4.6%; which could show a “rebound effect”, since the previous year said activity declined due to the teachers’ strike.

 

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