Costa Rican Economy Could Contract 3.6% in 2020

The Costa Rican economy is set to contract 3.6% this year as a result of a sharp decline in business activity in the wake of the coronavirus outbreak.

Decreasing export revenue and the muted consumer demand have sent the economy plunging, the country’s Central Bank President, Rodrigo Cubero, told a press conference last week.

If the economy shrinks in line with the prediction, the GDP will hit the lows of 1982, say, analysts. The banking regulator had previously put the economic growth for this year at 2.5 %.

Considering the comments by Cubero, the exportation sector is set to contract 5.3%. The economic pain is threatening to wreak havoc in the job market, with the central bank revealing that around 7,000 companies with 118,000 workers had already submitted requests for “modifying their employment contracts”.

Today, the Costa Rican tourism sector is in shambles, with airports across the country going quiet and cruise ships being banned. The hotel and restaurant sector will slump by 27.6%, says the central bank.

However, the economy will rebound sharply in 2021 because of the economic stimulus measures. Low inflation and the sharp decrease in oil prices will also benefit the economy in the long run, say analysts.

The Central American country will likely lift some coronavirus-related social distancing measures from May 1, as the number of infections is declining.