Nov. 7, 2008

Despite strong growth during the first four months of the year, the Costa Rican economy is slowing down, according to the Central Bank but still growing.

The economy grew 5.9 percent during the first four months of this year, down from 7 percent during the same period in 2007.

The Central Bank's monthly report on the economy indicates that “despite a trend toward deceleration and adverse conditions in the international context … domestic economic activity continues to display a robust growth profile.”

The document cites the construction industry, which grew 19.9 percent, as a major source of growth. The service sector grew 6.9 percent as a result of strong growth in telecommunications and finance. Manufacturing grew by 4.4 percent.

Agriculture contracted by 2.9 percent. Growth in pineapple, milk and other non-traditional crops failed to compensate for decreased sales of melons, bananas and sugarcane.

The country's trade deficit widened substantially compared to recent years. The trade imbalance reached $2.27 billion during the first four months, substantially higher than the deficits of $1.10 billion and $985 million reported during the same period in 2007 and 2006, respectively.

In terms of the fiscal situation, the Finance Ministry reported last week that the government registered a $230 million (2 percent of gross domestic product) financial surplus during the first half of the year.

The National Tourism Chamber (CANATUR) reported last week that the number of tourists visiting the country grew 12 percent during the first half of the year compared to the same period last year with more than 1 million foreign tourists visiting the country.

Consumer price inflation was 6.5 percent during the first six months, nearly 2 percentage points higher than during the same period last year (4.7), according to the National Statistics and Census Institute (INEC).

In 2007, the Costa Rican economy grew 7.1 percent, down from 8.6 percent in 2006.