Economists Warn Central Bank about Economic Slowdown and Unemployment

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    The Costa Rica News (TCRN) – A group of economists calls on the Central Bank of Costa Rica (BCCR), to pay more attention to the economic slowdown and unemployment.

    According to the argument of the group of economists, the change in the Consumer Price Index (CPI) remains relatively high, around 5% annually, compared with international standards ranging between 1% and 3% for developed countries and trading partners, a downward trend.

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    The Economist Group, which is composed of Jorge Guardia, Norberto Zuniga, Thelmo Vargas, Juan E. Muñoz, Juan Cristóbal Guier, Andrés Rodríguez, Álvaro Luis Trejos and E. Loria, among others, says that with the intervention of the Central Bank of Costa Rica (BCCR) to support the exchange rate band, particularly the lower band, and sterilization of excess liquidity released into the economy, are not additional pressures to higher price indices rather it “has increased the so-called “output gap “, which means there is room for a more flexible monetary policy without depressing prices, as there is some spare capacity.

    Experts support the reduction of Monetary Policy Rate 5% per year to 4% per annum and the deposit rate term a day Direct Central and CAF annual 3.30% 2.28% annum, given that both measures could alleviate, in part, the plight of the domestic producer, overwhelmed by a series of structural distortions and cyclical factors unfavorable to produce, which still prevail.

    However, the group of economists believes the BCCR must be very careful not to exceed their powers and increasing inflationary problems in the future, and be consistent in its monetary policy.

    One of the measures recommended by the experts is that the issuer requests the Executive Branch of the Legislature removed the bill to tax the income (interest) collected in Costa Rica by nonresidents.

    They grant that this could lead to very negative consequences to attract capital in the future, at a time when interest rates are rising in the international market and the currencies of some countries, such as Chile and Brazil, visibly depreciated against the dollar. CRHoy

    The Costa Rica News (TCRN)
    San Jose Costa Rica

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