The high cost of electricity and fluctuating exchange rate ranked among the greatest concerns for Costa Rican businesses during the fourth quarter of 2013, according to the Union of Private-Sector Chambers and Associations’ (UCCAEP) latest Business Pulse survey released Wednesday.
A majority of the 502 businesses surveyed said they do not plan to hire new employees in the first quarter of 2014.
UCCAEP’s president, Jaime Molina, used the survey’s findings as an opportunity to call for a “clear” policy from presidential candidates on expanding private-sector generation of electricity as a remedy for the country’s high cost of power.
“These results are more proof of the urgency to reduce electricity rates in Costa Rica. As a nation we are less attractive to international businesses that would prefer to go elsewhere because of the high cost of production in our country. If the country wants to grow, like the candidates say they want it to grow, Costa Rica is going to need more electricity,” Molina added.
Forty-five percent of businesses surveyed said the cost of electricity had a “high” or “very high” affect on their prices. Molina estimated that the cost of electricity in Costa Rica could be more than 20 percent higher than in other Central American countries.
Molina said that ruling party candidate Johnny Araya had a “clearer” plan for reducing the cost of electricity than opposition candidate Luis Guillermo Solís. The business chamber leader lauded Araya’s support for increasing the amount of privately generated electricity in Costa Rica.
Molina said Solís and his team had yet to convince UCCAEP that they had firm plans for how they would lower the cost of electricity in Costa Rica.
Molina noted that political uncertainty leading up to the Feb. 2 presidential election also weakened private business owners’ levels of confidence in the economy. Business confidence looking forward to the coming first quarter of 2014 dropped 4 percent from the same quarter in 2012.
The survey’s organizers suggested that the continued political uncertainty has kept businesses from hiring. Of those surveyed, 64 percent said they did not plan to hire new staff and 13 percent said they planned layoffs in the first quarter of 2014.
The Central Bank has sold over $60 million since Monday in an attempt to stem the recent devaluation of the Costa Rican currency.
Molina did not comment on the current exchange rate, ₡546.22 to the dollar, according to the Central Bank’s MONEX index Wednesday, but added that sudden drastic changes in the exchange rate were not good for the economy. “When we see changes like this, uncertainty grows, and that doesn’t help us,” he said.
UCCAEP surveyed 502 business owners and managers between Jan. 14 and 28. The survey has a 95 percent level of confidence and a 5.6 percent margin of error.