Costa Rica: Economic Forecasts for 2021 Shows Slight Improvement

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The economic shock of this 2020 will be slightly less than initially expected, as revealed by the Central Bank this weekend. Such minor deterioration will allow the initial 2021 forecasts to receive a small boost. According to the Central Bank’s projections compiled in its recent Monetary Policy Report, virtually all sectors of the economy will experience further improvement next year, with the exception of agriculture. Overall, the economy is expected to grow by 2.6% in 2021, compared to the 2.3% anticipated last July. Rodrigo Cubero, president of the Central Bank, pointed out that this improvement projected for next year is largely sustained by a recovery in domestic demand; that is, by more local people consuming, a fact that was particularly restrained during this 2020. “The contribution of domestic demand will change by 2021, domestic demand will behave better, there will be better household consumption as a result of a more decisive opening, as well as backing from consumer and investment credit,” said Cubero.

Throughout 2020, most of the impact on the agricultural sector had to do with a shrinkage in demand. Fewer people have been willing to purchase these products, especially outside the country, where the effects of COVID-19 and health measures have led inhabitants to replace certain products. This explains, for example, the reduction in demand for pineapple, foliage and melon. The sector has been maintained by the local dynamics of other products, such as legumes, roots and tubers, and vegetables. For this year 202, the sector is expected to end up with a drop of -1.8%. Initially, it was estimated to grow by 2.7%, but now the forecast has been reduced to 2.6%. Although this is an improvement over 2020, it will be less than expected.

Source: CR Hoy

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