An increase in oil prices in international markets is expected to take place next year. As a consequence, the inflation rate in Costa Rica will return to the levels established in the Macroeconomic Program 2016-2017. It would be about 3%.
Positive inflation levels within the target range helps the Central Bank (BCCR) to expand its monetary policy that has partially allowed to finance the fiscal deficit of the Costa Rican economy.
Luis Diego Herrera, economist at Acobo, supports this position and believes that a further deterioration in public finances and a highest debt regarding the gross domestic product (GDP) would make investors demand higher yields from the government to place their resources on Costa Rican sovereign bonds for 2017. In addition, the increase in international interest rates, mainly in the United States, would put additional pressure on local interest rates, and, consequently, on the cost of the interest to the Government.
According to Herrera, expectations of a weak growth in the world economy and interests from major oil producers worldwide make experts think that prices of this commodity will remain low by the end of the year. However, in 2017, the world’s economic recovery would boost demand for oil and its prices could increase again.