This Wednesday, the Costa Rican College of Economic Sciences (CCECR) presented its latest forecast for the Costa Rican economy for the remainder of this year, highlighting that it is expected to exceed the level of employment before the pandemic spread, despite the warning that the high inflation recorded this year would reduce From the purchasing power of families to the extent Raising the poverty level to a figure between 27% and 33% of Costa Rican families.
Regarding the information provided by the college president, Ennio Rodriguez Cespedes highlighted:
In the second half of 2022, the spotlight should focus on the rising cost of living and especially on its consequences for families living in fragile conditions. In addition, economic revitalization should be supported to achieve GDP growth of over 3% and implement employment policies to reduce the gender gap and boost youth employment. In turn, the forecast assumes that fiscal discipline will be maintained and that the international environment will not deteriorate beyond what was expected.
Among the forecasts made by the college, it was emphasized that since April 2021, the country is going through a growing inflationary process, to the extent that between August of the previous year and July of this year, inflation reached its highest level since April. 2009.
Data D +: The cumulative inflation rate between January and July of this year was 8.52%
As indicated by the college The process of international and national inflation has led to a sharp rise in the prices of the basic food basket. This huge increase hits a large section of the national population whose purchasing power is declining which, inevitably, will also mean the growth of poverty levels in the country, which can reach 29.9% of families and the maximum may reach 8.9%.“.
That is why the college called on the authorities to “Implement actions that address high growth in the cost of living, but with specific public policies targeting this most vulnerable segment of the population.”
College expectations show that it’s not just about The Costa Rican economy is facing an inflationary challenge, as inflation in our main trading partner (the United States) is expected to reach 5.4%, although potential relief may come from lower fuel prices, given that oil prices have been revised downward , after accessing the historical values in the previous months.
In addition to the high cost of living, the exchange rate could reach a value of 695 colones per dollar by the end of the second semester of this year, and the college projected 685 ± 10 colons per dollar. The college noticed that “Colon depreciation has been increasingly significant since 2017, when it decreased by 2.9%, in 2020 it was 4.5%, and in 2021 it decreased by 7.1%.”.
Among the main reasons given by the college to explain consumption, it was pointed out “Deterioration in terms of trade as a result of the accelerated increase in import prices, especially fuel, grain and fertilizers.”
On the other hand, though Costa Rica is expected to maintain growth in its production until closing year, if “He carries The trend of its economy slowing down since 2017, Greatly exacerbated by the epidemic. It is estimated that national production growth will be around 3.4%, which is significantly lower than it was at the beginning of this year when it was expected to reach 4.5%.”.
Although the college confirmed that the good news for the second semester will be so The unemployment rate may be lower than it was in mid-2018 (11.1%)Remember to be careful and look at the data along with the level of occupation and the growing number of frustrated people, the demographic that gave up in their search for work due to the lack of positive results.
Data D +The unemployment rate for the April-June quarter was 11.7%, although the working population is still 54,000 fewer than it was before the pandemic.
From the college they also expected a positive fiscal closing in 2022, given improved debt ratios and fiscal balance, as long as “Fiscal discipline is maintained, that the international situation is not deteriorating and that the projected growth of GDP can be maintained.”
The projection highlights that”Until 2020 (11.4% of GDP), the fiscal deficit showed an upward trend, from 2021 there was a change in trend, and the fiscal deficit is expected to be -3.4% of GDP for 2022. In addition, from This year, it is expected to have a primary surplus of 0.9% and a fiscal deficit of -4.3% of GDP. It must be remembered that the path to financial sustainability depends on maintaining an initial surplus..
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