More ominous economic news appeared on the horizon this week for Costa Rica after the Central Bank announced the nation’s trade deficit is worsening, further depleting the bank’s reserves.
With imports rapidly outpacing exports, the trade deficit grew by 91.2 percent over the 12 months ending in August, the financial advising firm Aldesa wrote this week in a daily markets analysis.
The deficit totaled nearly $3.9 billion in August, Aldesa said. While exports last month were up 5.6 percent compared to August 2007, imports had risen 26.7 percent.
With more money leaving the country than entering, the Central Bank’s international monetary reserves have continued to fall as it fights to keep Costa Rica’s colonto-dollar exchange rate within guidelines it set earlier this year (TT, July 25).
Those reserves fell by $48.5 million last week and have now dipped to their lowest level in nearly a year: $3.865 billion.
Based on the average monthly cost of imports from the first eight months of the year, the bank’s reserves cover less than three months’ worth of imports. Covering three months is considered to be a minimum indicator for a stable financial system, according to Aldesa.