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New Central Bank chief dismisses Citigroup’s grim Costa Rica forecast

April 23rd, 2014 (InsideCostaRica.com) Olivier Castro, who has been selected by President-elect Luis Guillermo Solís to head Costa Rica’s Central Bank, is dismissing a grim forecast by Citigroup that slashed its 2015 growth forecast for Costa Rica by nearly half.

 

Speaking to Bloomberg, Castro said Costa Rica’s $45 billion economy would expand by 5% in 2015.

 

On April 10th, Citi cut its 2015 growth forecast for the country from 4% to 2.2% after announcements that Intel would close its manufacturing operations and Bank of America would close its facilities in the country, leaving 3,000 people unemployed.

 

Castro, however, disagrees.  “Growth will be higher [than Citi’s forecast], especially because we’re beginning to see signs of greater growth in the world economy, but also because of the work we will do to turn on the other engine of the economy, the domestic market,” Castro told Bloomberg, adding he believes the economy will grow by 5% in 2015.

 

Castro also does not believe the departures of Intel and Bank of America had anything to do with the country’s business climate or policymaking.

 

“What happened with Intel and Bank of America is not the result of something the country did wrong,” Castro told Bloomberg.  “What the next government will do is make this very clear, because the policies it will put in place will attract investment.”

 

Economists warned this month that the departure of Intel – which accounted for more than 20% of Costa Rica’s total exports last year and 5% of the country’s entire $45 billion GDP – would have a serious effects on the economy.

 

Castro, 73, received a Masters in economics from the University of Kansas, and is the former head of Banco Nacional.   Castro also headed the central bank’s financial division in the 1980’s, when Costa Rica defaulted on its debt obligations.

 

Castro is expected to take the helm of the Central Bank on May 9th.

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  • Andrew

    Let´s see: Citi says Costa Rica´s economy is going to decline by about half and Castro says it will grow by 5% because the new administration is going to flick the switch on the “other engine of the economy”.
    My money´s on Citi´s forecast, particularly when Castro goes on to say that Costa Rica´s (ridiculous labor laws) had nothing to do with Intel or BofA leaving?
    My advice to Castro: Stick your head further into the sand. Who knows? There might me some turtle eggs down there.