Costa Rica’s Economy Rebounding, Vice President Says

Costa Rica’s economy is rebounding in the wake of the global financial crisis as exports recover and foreign direct investment picks up, lowering unemployment, Vice President Luis Liberman said.

About 168,100 jobs have been created in Central America’s second-biggest economy since the third quarter of 2010, just after President Laura Chinchilla took office, Liberman said in an e-mail today to Bloomberg News. Unemployment fell to 8.3 percent last year after peaking at 10.9 percent in the third quarter of 2011, according to data from the national statistics office and the United Nations Economic Commission for Latin America and the Caribbean.

“Costa Rica is a very open economy whose growth depends on exports of good and services and FDI flows,” Liberman wrote.

Chinchilla’s government is defending its record ahead of Feb. 2 presidential elections, which polls show will probably go to a second round for the first time since 2002. Chinchilla, 54, isn’t eligible to run again.

The two most recent polls show diverging results.

Ruling party candidate Johnny Araya has an “important lead” in the race, Liberman said, citing a Jan. 14-25 survey by CID Gallup. That poll showed Araya with 35.6 percent support among likely voters compared with 21 percent for Broad Front party candidate Jose Maria Villalta. The margin of error was 2.8 percentage points.

A separate poll by the University of Costa Rica published Jan. 29 showed the race in a statistical tie, with Araya getting 17.4 percent support to Villalta’s 14.4 percent. The margin of error in that survey was 3.46 percentage points. A candidate needs 40 percent support to avoid an April 6 runoff.

Government Resignations

Chinchilla’s government faced a series of corruption accusations in 2012 and 2013 which prompted the resignation of her finance and transportation ministers. Her communications minister quit last May in a scandal over the government’s use of a private jet. Chinchilla wasn’t accused of wrong-doing.

Villalta, a 36-year-old lawmaker, has “surged as a serious contender” in the race, prompting the government to delay its push for a fiscal package to narrow the budget deficit, Citigroup Inc. said in a Jan. 7 report. Central Bank President Rodrigo Bolanos today said the budget deficit could climb to 6 percent of gross domestic product this year and 6.4 percent next year if a fiscal package isn’t passed.

While unemployment has declined, the 8.3 percent estimate for 2013 is above the 6.3 percent average for Latin America and the Caribbean, according to the UN commission, known as Cepal.

FDI rose 15 percent in the first half of last year from a year earlier, Cepal said. Economic growth in the $45 billion economy will accelerate to 3.8 percent this year and 4.1 percent in 2015 from a preliminary estimate of 3.5 percent last year, Bolanos told reporters in San Jose.

To contact the reporter on this story: Isabella Cota in San Jose, Costa Rica at icota@bloomberg.net

To contact the editors responsible for this story: Andre Soliani at asoliani@bloomberg.net; Bill Faries at wfaries@bloomberg.net

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