Costa Rica: Fewer Public Works Affects Construction Industry

The lack of new public works projects is putting downward pressure on the growth of the construction sector in Costa Rica, which went from 4.5% in 2015 to only 0.7% being projected for the new year.

Wednesday, January 13, 2016

The 2016-2017 macroeconomic program by the Central Bank had already projected an annual decline of 9% in public works this year.

Both Olman Vargas, executive director of the Association of Engineers and Architects, and José Luis Arce, an economist at Consejeros Económicos y Financieros, told that the momentum lost by the public sector will affect the results of the sector in the new year, with growth being only 0.7%.

Due to the lack of implementation of road projects, the finalising of the Reventazón hydro station, and the fact that the Moin Container Terminal is the only project of weight in 2016, the recovery in overall construction activity will take until 2017, with a projected growth of 5.3%, according to the article.

However, La Nacion reported that "... private construction is keeping up the momentum with residential buildings, office and commercial centers. For the private sector, the bank projects an increase of 4% this year, while in 2015 it was 6%. This growth will be insufficient to offset the drop in public projects. "

Other factors such as the eventual rise in interest rates in colones and dollars, the increase in the cost of financing a home, or the tax reform proposed by the government to tax services will also contribute to the low growth forecast.

More on this topic

Basic Passive Rate Remains at 6.60%

July 2013

The Central Bank of Costa Rica reported that from the 11th and until at least the 18th of July, the base rate will remain at 6.60%.

José Luis Arce, an economist at Consejeros Económicos y Financieros (CEFSA), stated that the base rate is close to reaching its lowest level and therefore he does not foresee any significant drops from now on.

Construction Boom in Costa Rica in 2012

January 2013

The Association of Engineers and Architects registered in 2012 more than 8 million square meters of construction, a figure that is 17% higher than that reported last year.

A press release from the Association of Engineers and Architects of Costa Rica (CFIA) reads:

Construction sector reported growth of 17% in 2012

Road Built without Plans

May 2012

In Costa Rica, $40 million was spent building a 160km road without surveying, design of ditches, drains or crossings over rivers.

The border dispute between Costa Rica and Nicaragua over the mouth of the San Juan river was the cause of an emergency decree by the Costa Rican government, which ordered the construction of a road alongside the right side of the river for a stretch of 160 kilometers.

Costa Rica: No Progress in Infrastructure

May 2011

There are too many attorneys and too few engineers on the staff of the Costa Rican Ministry of Public Works.

The Ministry of Public Works and Transport (MOPT in Spanish) appears to have no solution to the obvious lagging behind of Costa Rica in terms of public infrastructure.

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