Central Bank: Economic Recovery is ‘Fully Under Way’

May 7, 2010

In his final appearance as president of the Central Bank of Costa Rica, Francisco de Paula Gutiérrez delivered some positive news about the state of the Costa Rican economy.

“The economic recovery in Costa Rica is fully under way,” he said. “Economic growth accelerated the second half of 2009 and has maintained its vigor during the first quarter of 2010. The attitude of consumers and businesses has stabilized and financial conditions have been improving. … In general, the recovery of economic activity has been stronger than initially predicted.”

Gutiérrez backed this claim by citing the improved consumer confidence rating, which was measured at 54 percent in February by the University of Costa Rica; the 4.2 percent growth in the world gross domestic product; and the report that, through February, 18,064 new employees had registered with the Costa Rican Social Security System (Caja). Gutiérrez also spoke about the economic benefits of the decreasing inflation rate, which the Central Bank hopes will finish at an annual rate of between 4 and 6 percent by year’s end. After the first four months of the year, the inflation rate in Costa Rica – traditionally the highest in Central America – stands at 2.6 percent. On Tuesday, the National Statistics and Census Institute announced that inflation grew 0.06 percent during April.

In addition to the positive economic figures, Gutiérrez also spoke at length about 2010’s exchange rate fluctuations. As of Wednesday, US$1 can be purchased for ¢505, down from ¢558 since Jan. 1. Gutiérrez explained that volatility of the colón’s value is expected within the buy and sell bands of the Costa Rican monetary system and that, compared to other international currencies, such as the Brazilian real and the euro, the fluctuations in the colón were considerably less dramatic.

“The Central Bank doesn’t have a crystal ball that determines the monetary fluctuations,” Gutiérrez told The Tico Times.

“We cannot forecast what the exchange rate will be or when it will change. People are complaining about the volatile exchange rate and that the Central Bank is manipulating it. The reality is, other countries have currencies much more volatile than ours.”

According to Juan Pablo Segura, a trader for the financial consulting firm Aldesa, the exchange rate should return to a value of ¢550 to $1 by the end of 2010. Gutiérrez, who has been the Central Bank president since 2002, will step down from his post at the end of this week. He said he will take a few months to relax before returning to teach at the Harvard-affiliatedINCAEBusinessSchool in La Garita, northwest of San José, where he has taught since 1986.

–Adam Williams

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