Central Bank: Economy Continues Steep Slide

March 20, 2009

Economic activity slowed for the fourth month in a row in January, registering a 4.5 percent drop from 12 months before, according to figures released Monday by the Central Bank, a further sign that the global slump is weighing on the Tico economy.

The manufacturing industry sustained the most dramatic downturn, recording a 17.5 percent slide in production from the year before, the Central Bank said in its Monthly Economic Activity Index (IMAE).

Hotels were also heavily affected, losing nearly 9 percent of the guests they had at the start of 2008. “That’s an acceptable performance in the middle of the crisis,” Tourism Minister Carlos Ricardo Benavides told The Tico Times.

But some hotels have reported being hit harder than they had initially forecast. The recently opened luxury hotel J.W. Marriott Guanacaste Resort & Spa, located in Hacienda Pinilla along the northern Pacific Coast, is noticing a 20 percent drop in their expected sales for this quarter, said resort manager Carlos Diago.

“The recession (in the United States) has a direct impact here,” said Diago.

A number of travel related businesses are feeling the hit, too. “The drop was felt the most in January through mid-February,” said one Guanacaste-based tour guide.

The agricultural sector also sustained a significant drop in production of about 4 percent, according to the IMAE.

The Agriculture and Livestock Ministry (MAG) has implemented plans to reactivate production in different sectors around the country during the last three months of 2009. The Development Bank System (Sistema de Banca de Desarrollo) has about ¢222 billion ($396 million) available for small and medium producers.

Regional MAG offices will invest about ¢28 billion ($49.9 million) in the next two years, which will benefit more than 8,400 producers in rural areas such as parts of the Central Valley and the Brunca region, in the country’s Southern Zone, where about 34 percent of the population is considered poor.

“These measures are aimed at generating jobs and income (in these areas),” said a statement from MAG.

In the commerce sector, a contraction of 1.7 percent was registered for the month of January.

“We see that there is a greater exodus of currency in that sector than it is coming into the country,” Ana Toyama, strategy coordinator at Aldesa, a financial consulting firm, said this week.

Conversely, the telecommunications and medical tourism sectors are actually registering positive numbers during the crisis.

“We would like to bet on the technology sector as a recovering tool for the national market,” said Eric Vargas, strategy director at Aldesa.

Hospitals and clinics that cater to “medical tourists” estimate they will receive as many as 100,000 patients this year, according to Benavides.

Aldesa also said in a statement Monday that the increase of interest rates in colones, among other factors, has had a negative impact on growth of the Costa Rican economy.

Tico Times Online Editor Alex Leff contributed to this report.

 

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