Costa Rican Economy Will Contract In 2020, With Limited Long-Term Upside

  • Fitch Solutions forecast that real GDP in Costa Rica will contract 4.0% y-o-y in 2020 due to the economic impact of the Covid-19 pandemic and tightening fiscal policies. This is a revision from the previous forecast of a 3.1% decline.
  • A weak global economy will limit exports and inbound investment, while rising unemployment will undermine private consumption over the coming quarters.
  • While Fitch forecasts that the Costa Rican economy will return to 3.1% growth in 2021, they noted the possibility of a second wave of Covid-19 in Costa Rica, or a prolonged recession in the US, as downside risks to their outlook.

(Source: Fitch Solutions)