Friday, December 9, 2022

The OECD forecasts slight economic growth of 2.3% for Costa Rica in 2023

The Organization for Economic Cooperation and Development (OECD) expects the Costa Rican economy to grow just 2.3% in 2023 and that due to the country’s monetary policy and inflation, consumption will also remain low.

In its outlook report published this Tuesday, the OECD explains that the Costa Rican economy will experience an improvement in 2024 to stand at 3.7%.

The study indicates that the “high and persistent inflation”, added to the country’s monetary policy, will affect household income and reduce private consumption in the second half of 2022 and in 2023, which will limit the positive impact of the recovery of tourism in economic activity and employment.

The OECD explains that after reaching a peak of 12% last August, inflation will close 2022 at 9% and drop to 6.9% in 2023 and 4.2% in 2024.

Regarding the fiscal perspective, the OECD indicates that it has improved due to the implementation of the fiscal rule and better than expected results, however, it warns that the public debt close to 70% of the Gross Domestic Product (GDP) and the high interest payments, forces a “prudent” stance.

According to the OECD, exports continue to drive Costa Rican economic growth and demand for manufacturing remains solid, while tourist activity is close to pre-COVID-19 pandemic levels.

The OECD document affirms that Costa Rica must continue with the structural reforms that it has been implementing since its accession process to the organization, in order to achieve growth and economic resilience, as well as to reduce inequalities.

In addition, the promotion of education in scientific careers could generate growth and equity, while in order to advance in the goal of decarbonizing the economy by 2050, Costa Rica must maintain the achievement of generating almost all of its electricity with clean sources and aim towards the expansion of the fleet of zero emission vehicles.

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