Banco Central Reports
Economy Shrinking; Raises Interest Rates
The Banco Central de Costa Rica (BCCR) - Central Bank - informed
yesterday that the Costa Rican economy during the last quarter of
2008 showed the greatest decrease of the last almost 20 years.
In December the monthly economic activity index (IMAE) registered
the largest drop with respect to the same period a year earlier,
since the index was put into place in 1991.
In October 2008, the IMAE index fell 0.8% with respect to October
2007. In November 2008 the index fell 2.23% with respect to November
2007, and in December 2008, the index fell a record 3.14% with
respect to December 2007.
The ministro de Hacienda, Guillermo Zúñiga, said he sees a "very
fast" deceleration in the economy but does not yet date call it a
recession, though he doesn't see positively the possibility that the
IMAE index will rebound in January 2009.
"The results are very bad. The drop in December is much greater than
in November, were we can see a deceleration", said Zúñiga.
Interest rates are taking a big jump today as the Banco Central is
increasing the "tasa básica pasiva" by 0.75 percentage points,
increase the rate from 11.25% to 12%.
"Basically this was due to an increased inflow of money by the
private banks this week, which paying out higher interest rates on
savings, which affected the formula for calculating the base rate",
explained Pablo Villalobos, who in charge of monetary and financial
statistics for the Central Bank. |
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