The Costa Rica Central Bank (BCCR) affirms that the Costa Rican economy is not going through an economic recession process and is not heading into a recession process.

According to Eduardo Prado, manager of BCCR, the evolution of the recent and past numbers allows them to project an economical growth for the years 2018 and 2019 of close to 3.6% which is higher than the average of the Latin American and Caribbean countries.

“Projections show that Costa Rica will grow 3.6% in 2018 while Latin America and the Caribbean as well as Brazil will grow only 1.9%. The rest of the world is expected to grow 3.9%; and our country is close to this last number”, explained Prado. He also highlighted an increase in the areas of construction and finances.

BCCR presented its Macroeconomic Program 2018-2019 last week where they confirmed that the long term commitment by the entity is to keep inflation between 2% – 4%.

This time, the Board of Directors announced the adoption of a flexible monetary scheme of inflation goal, which concludes the transition process that began in 2005. “With this we formalize the political strategy that the Central Bank has followed for several years now, with actions that allowed to gradually reduce the inflation from double digit numbers to levels close to what our main commercial partners show. BCCR will continue to follow up on the performance of the economy under a comprehensive approach and will incorporate to its analysis the stage of the economical cycle in which the country is; in addition, it will evaluate the different policy options and their impact over the rest of the macroeconomic variables, making gradual adjustments to the policy tools”, detailed Prado.

When it comes to the balance of payments the surplus of the balance of services in relation to the GNP will exceed the deficit of the balance of goods which is favorable for the external position of the country. Foreign direct investment is also a significant support to maintain this position.

The projection of BCCE do not take into consideration a fiscal reform or sovereign debt issuing contracts; due to this, the fiscal deficit is expected to close in an alarming 7% of the GNP by December of 2018, considering a conservative scenario in which Treasury will not have new foreign income.

Vice-President of the Republic, Helio Fallas, explained that the general population still doesn’t perceive the fiscal deficit as a problem, which obeys to an increase in the debt, which at the same time translates into a substantial increase of the interest rates. “Treasury has implemented technological and administrative measures that have allowed the numbers of income and expense to improve, but this is just part of the proposal that the Executive Branch presented to the Legislative Assembly since 2015 and that is required by the country to strengthen the tax system and organize public expenses”.

The International Monetary Fund, which recently published the Wold Economic Outlook Update also confirms that the world economy is expected to grow by 3.9% this 2018. And shows Costa Rica among the countries with a positive economic growth during 2017.