Macroeconomic Forecast Costa Rica

BMI View: Costa Rican consumer price inflation (CPI) fell to 5.0% y-o-y in September from 5.2% and 5.7%, in August and July respectively. We believe inflation, which is at its lowest level since December 2009, is well on track to hit our projection of 4.8% y-o-y by end-2010, particularly as external demand from the US cools throughout the remainder of the year. Going forward, we expect CPI to pick up to 5.5% y-o-y by end-2011 as private credit growth increases while the central bank continues to loosen its monetary policy in order to stem speculative capital inflows and limit upside pressure on the colon.

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