Costa Rican economy could make a 2010 comeback

May 15, 2009

Even though things look dire at the moment, as the economy just recorded its sixth month of decline, Costa Rica is poised to grow again in 2010, an International Monetary Fund official told reporters Monday.

Because of some of the actions taken by the government to ward off the crisis, an IMF study predicted that the Costa Rican economy would see around 0.5 percent growth this year, and 1.5 percent growth in 2010.

Speaking to reporters Monday, the deputy director of the IMF´s Western Hemisphere Department, Miguel Savastano, said the government´s public spending programs on infrastructure and some of its moves to protect vulnerable sectors have put Costa Rica in a position to move back in a positive direction, reported the business newspaper El Financiero on its Web site Monday.

The study predicted the world economic meltdown would not affect Latin America nearly as much as it has already affected other parts of the world. In addition, it said the crisis would not last as long in this area of the world.

While Panama, Honduras and Guatemala are all faring better than Costa Rica within Central America, both Costa Rica and Nicaragua are expected to at least log positive growth – both predicted to grow close to 0.5 percent in 2009.

But after two quarters of negative growth, the economy is going to have to make up ground soon to reach that positive growth mark. In March, the Central Bank recorded the highest rate of contraction – 6.2 percent negative growth in March, when compared with March of last year – on its monthly economic activity index since the bank started calculating the index in 1991.

Still, with Latin America´s solid financial system and government actions to quickly reduce the amount of damage such as investments in infrastructure and creation of jobs, a recovery could be around the corner, the IMF said.

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