NS4540 Winter Term 2018 Costa Rican Outlook Federal Reserve Bank of Chicago, Strong Dollar Weak Dollar

Overview President Solis of the Partido Accion Ciudadana (PAC) will maintain generally pro-business policies but no new reforms during the remainder of his term which ends in May 2018 EIU expects the PAC to win the election and pursue broad policy continuity after remaining in office. Following growth of 3.4% in 2017, growth should average 4.0% from 2018-2022 While some progress will be made in the fiscal area, the debt/GDP ratio will reach 79.2% by 2022

Forecast

Forecast Risks Fiscal consolidation efforts fail Probability high, impact very high, intensity = 20 Electricity costs rise affecting profits and competitiveness Probability moderate, impact high Intensity = 12 The government fails to overcome lack of co-operation and obstructionism in a more fractured legislature Probability moderate, impact high, intensity = 12 Revenue shortfalls lead to higher tax rates and/or new taxes Probability low, impact very high, intensity = 12 Bureaucratic delays hamper private sector activity Probability moderate, impact moderate, intensity = 9