Costa Rica hikes economic growth forecasts on more exports, demand

However, external risks such as global inflationary pressures, the climate phenomenon known as El Nino and a foreign-exchange squeeze could negatively impact the economy, the bank added.

Costa Rica's central bank hiked its 2023 and 2024 economic growth estimates on Wednesday, a bigger-than-expected expansion driven by growing exports and higher domestic demand. The central bank now sees the Central American gross domestic product (GDP) growing by a robust 5.0% this year, and then by 4.3% next year, with Costa Rica likely seeing more growth across several industries, especially construction, business services and manufacturing.

The tourism sector - a major anchor for Costa Rica's economy - also performed well, the central bank said, along with some exports including medical supplies. The updated economic forecasts are 0.8 and 0.5 percentage points higher than the bank's July estimates for 2023 and 2024, respectively.

Costa Rica's economy is benefiting from falling consumer prices, a government budget surplus excluding debt payments as well as a drop in its debt to GDP ratio, the central bank said. However, external risks such as global inflationary pressures, the climate phenomenon known as El Nino and a foreign-exchange squeeze could negatively impact the economy, the bank added.