Weekly review

Trade balance deficit

The gap between imports and exports of goods and services –the trade balance deficit– has widened in 2008. During this year’s first quarter, the purchase of goods and services abroad surpassed by $505 million the income from exports. That amount is three times the current account deficit recorded the first quarter last year, according to the payment balance disclosed by the Central Bank. The cumulate deficit in the last 12 months to last March reached $1,846 million, 60 percent more than in the year that ended in March 2007. According to analysts, the trend is influenced by the rising prices of oil and food. Other factors are a drop in sales to the U.S. market and the revaluation of the local currency, the colon.

Services and production

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The growth in the service sector helps the continued growth of the production of Costa Rica, which has slowed down in the last two years. The increase has been steady along the last 12 months in transportation, telecommunications, financial, professional, and commercial. In March, the indicator of the production of services, established by the Central Bank, was 7.3 percent more than in March 2007, reinforcing a trend that started in 2005. On the other hand, overall production increased 6.4 percent in March, as compared to a year before. This rate is higher than the average one for the country in the last 17 years (5.3 percent), but much lower than the 9 percent reached in 2006.

Fewer cantaloupes

A marked drop in the production of cantaloupes and of sugar cane, and a light one in that of bananas and coffee account for the lower agricultural production recorded in Costa Rica this year’s first quarter. According to the Monthly Economic Activity Index of the Central Bank, agriculture went from a year on year increase of 14 percent in 2006 to a -1.45 percent one in March.

Climate change

Great Britain will donate $2.3 million to fund a study of the economic impact of climate change in Central America, the British ambassador to Costa Rica Thomas John Kennedy disclosed. The study will last some 15 months and it aims at showing the region’s nations the cost of not acting now and supporting a joint mitigation strategy. In 2006, Britain disclosed the Stern Report, which showed that it is necessary to invest 1 percent of the world Gross Domestic Product to mitigate climate change, and that otherwise the world would live a recession amounting to 20 percent of the global GDP.

Avalanche

Ashes, lava, and gases made up the materials of an avalanche on the slopes of Arenal Volcano, which in the coming weeks reaches 40 years of continuous activity. According to volcanologists, the materials rolled 800 meters (2,625 feet) down the southwestern side of the mountain. Even though nobody was affected, the authorities evacuated 20 tourists and closed down Arenal Volcano National Park for a few hours.

Donation for victims

The Inter American Development Bank donated $200,000 to the National Emergency Commission (NEC) to ease at least part of the suffering of the victims of tropical storm Alma. Part of the funds will be allocated to lease heavy equipment to continue the cleaning up of roads, particularly those leading to communities that are still isolated. The money will also fund food and helicopters to take it to those areas that cannot be reached by land yet, NEC chairman Daniel Gallardo explained.

Pan American Highway

Even though the Ministry of Public Works and Transportation re-opened traffic on the southern Pan American Highway, the number of vehicles was much smaller than on any regular day, authorities report. The road is open only 5 a.m. to 5 p.m., and the highway police regulates tightly regarding speed, since many spots are muddy and skidding off the road is a permanent danger. In the meantime, repairs continue at the fastest rhythm possible, but the works won’t be completed in less than six weeks, according to the engineers in charge.

Avocados and cocaine

The Costa Rican police dismembered the link here of an international drug trafficking ring. According to official sources, the organization operated in Colombia, Costa Rica and Mexico and used avocado exports to hide the drug. The police arrested four Costa Ricans, two Guatemalans, and a Mexican and confiscated 144 kilos (313 pounds) of cocaine in the operation.

Fruit pulp to China

The Foreign Trade Promoter (PROCOMER in Spanish) aims at selling fruit pulp in the Chinese market as one of the options to diversify Costa Rican exports to that Asian nation. The intention is the Chinese use the pulp as the base for fruit juices, explained Cynthia Arias, PROCOMER economic analyst. She added that, so far, coffee and decoration plants have led exports to China.