Friday 27 January 2023

“It’s one of slowdown, not a recession,” says Central Bank President

We will not have a recession, but a complicated growth, the economy as a whole continues to grow,” assures Rodrigo Cubero, president of Banco Central de Costa Rica

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27 January 2023 - At The Banks - BCCR

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We are not in a recession and a contraction of the economy is not expected either, was the message on Monday by Rodrigo Cubero, president of the Banco Central de Costa Rica (BCCR) – Central Bank, when presenting the updated macroeconomic forecasts for 2019 and 2020.

“It’s one of slowdown, not a recession,” said Rodrigo Cubero, president of the Central Bank. Image: La Republica

According to the Central Bank, we will have a slowdown Gross Domestic Product (GDP) from 2.6% last year to 2.2% in 2019, the slowest growth in a decade.

The Central Bank added that little optimism is perceived by households and businesses, which impacts trade, as well as external shocks; for example, the lower price of pineapple and climatic problems.

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Another concern is the fact that there are few sources of growth before a government that must cut costs and that demonstrates a chronic under-execution in infrastructure projects.

Precisely, the public sub-execution in road, aqueduct and sewer projects was a “no less” problem during the first part of the year, which must be corrected to revive the economy.

In addition, the risks to economic growth have a downward bias; among them, the threat of strikes this year and the socio-political situation of Nicaragua, the Central Bank added.

On the other hand, there are factors that could inspire confidence, such as the better credit conditions promoted by the Central Bank and the National Financial System Oversight Council.

The Central Bank predicts that the pace of growth would accelerate for the first time in four years to 2.6% in 2020, hand in hand with a rebound in the world economy that would give Costa Rica a break.

“We are not in a recession, this is important to say, there are some activities that are in a contraction phase; some, technically, could be said to be in recession because they have been in negative growth for six consecutive months, but the economy as a whole continues to grow,” Cubero said.

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