Friday 17 September 2021

Higher Dollar and Interest Rates Slowed Consumer Spending

Economists and business are expecting a pickup in consumer consumption by the end of the year.

Paying the bills

Latest

Chile reopens borders to visitors ahead of summer tourism season

Q24N - SANTIAGO (Reuters) - Chile announced plans to...

Chile among the 5 countries that are opening up and living with Covid

Q REPORTS - London (CNN) - More than 18...

Why buy a flat in Dubai

Investing and getting a good income is one of...

Today’s Vehicle Restriction September 17: Plates ending in “9 & 0” CANNOT circulate

QCOSTARICA - For today, Friday, September 17, vehicles with...

Italy to bring in vaccine passes for entire workforce

ROME — Italy is to require the country's entire...

Number of minors victims of the pandemic in Costa Rica reaches 19

QCOSTARICA - A baby of one month and 20...

CCSS activates ‘vacunatón’ against covid-19

QCOSTARICA - Starting this Friday, and for 10 days,...
Paying the bills

Share

Economists and business are expecting a pickup in consumer consumption by the end of the year, when payment of the ‘aguinaldo’ (year end bonus) and major shopping days, such as Black Friday and Christmas. Photo John Duran, El Financiero

The constant instability of the dollar exchange rate and the increase in interest rates, especially in colones, have slowed the growth of consumer spending so far this year.

The El Financiero reports, “up to the first quarter of 2016, household spending grew steadily, reaching an accumulated year-on-year variation of 5.1%. Since then, it began to slow down to a cumulative variation of 4.2% as of March this year. Meanwhile, government spending has increased in the same period, especially, from the first quarter of 2016.”

- Advertisement -

The Programa Macroeconómico del Banco Central (Macroeconomic Program of the Central Bank), it was clarified that this (public spending) had a growth of 2.7% during the first semester, slightly higher than the same period the previous year.

Alonso Elizondo, director of the Chamber of Commerce, explained that the reduction in the gap between private and public spending and the slowdown is explained by a reduction in disposable income in households, as a consequence of increases in interest rates, the greater depreciation of the colon with respect to the dollar and the levels of inflation of this year, higher to that of a year ago.

Increases in rate increases began June, after the Central Bank increased the Monetary Policy Rate five times (from 1.75% to 4.50%), leading banks to raise their rates in colones as a measure to restore the premium for investing in that currency and lower the pressure on the exchange rate. Although the measure worked, it had a counterproductive effect on consumer spending.

According to the Consumer Confidence Index of the UCR (University of Costa Rica), published in May, 56.8% of consumers expected increases in the interest rates for loans and 50.8% considered it a bad time to borrow to buy durable goods, such as house and car.

Precisely for that, the sale of new vehicles fell 8% in the first half of the year.

The perception of consumers will affect the growth of credit, especially in dollars and, therefore, of spending.

- Advertisement -

 

 

- Advertisement -
Paying the bills
Ricohttp://www.theqmedia.com
"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

Costa Ricans lose hope of a low dollar

QCOSTARICA - In December, Costa Ricans expected the dollar exchange rate...

Dollar exchange maintains an upward trend

QCOSTARICA - The dollar exchange has maintained an upward trend reaching,...

Subscribe to our stories

To be updated with all the latest news, offers and special announcements.

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.