Search

 

Cablegate: Investor Confidence in Costa Rica Reaches New Low

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SAN JOSE 002731

SIPDIS

SENSITIVE

WHA/CEN
EB FOR WCRAFT, BLAMPRON
E FOR DEDWARDS
WHA/EPSC FOR KURS, LGUMBINER
STATE PASS TO USTR FOR AMALITO

E.O. 12958: N/A
TAGS: EINV KIDE PGOV CS
SUBJECT: INVESTOR CONFIDENCE IN COSTA RICA REACHES NEW LOW

REF: A) SAN JOSE 02664; B) SAN JOSE 02460

1. (U) Summary: The Central Bank of Costa Rica (BCCR)'s
most recent (Jul.-Sept. 2005) quarterly survey says investor
confidence has reached a new low. When asked "Is now a good
time to invest in Costa Rica, only 4.2 percent said "yes",
75.0 percent said "no", and 20.8 percent were "unsure". End
Summary

2. (U) All of the figures in this cable come from BCCR's
most recent quarterly "Survey of Economic Perspectives
http://www.bccr.fi.cr/ndie/Documentos/Informe %20Encuesta%20I
II-05.pdf (specifically "Grfico No. 11" entitled "The
current Investment Climate" on page 11) and reports from
earlier quarterly found at
http://www.bccr.fi.cr/ndie/encuesta_perspecti vas.htm.

3. (U) According to the third quarter 2005 report, only 4.2
percent of the Costa Rican respondents believe now is a good
time to invest in Costa Rica. More importantly, those who
believe that now is a bad time to invest reached a new high
of 75.0 percent. Opinions have solidified over the last
year with those saying they were "Unsure" reaching a new low
of 20.8 percent.

4. (U) Analyzing BCCR data on investor confidence over the
last 12 quarters shows that confidence peaked at 61.0% in
the first quarter of 2004 when Costa Rica concluded CAFTA
negotiations with the U.S. Confidence sunk to the low
double-digits for the next two quarter as negotiations to
conclude CAFTA-DR continued. Once CAFTA-DR negotiations
concluded and the agreement was signed on August 5, 2004, it
soon became clear that the Pacheco administration had no
intention of pushing CAFTA forward. Confidence dove in the
fourth quarter of 2004 into the low single digits where it
has remained ever since.

5. (U) Here is the trend over the last 12 quarters to the
questions "Is now a good time to invest in Costa Rica?":

Good time Bad time Unsure
--------- -------- ------
Q4 2002 30.3% 44.7% 25.0%
Q1 2003 12.8% 53.8% 33.3%
Q2 2003 14.6% 51.2% 34.1%
Q3 2003 38.5% 10.3% 51.3%
Q4 2003 38.5% 20.5% 41.0%
Q1 2004 61.0% 15.0% 24.0%
Q2 2004 17.4% 47.8% 34.8%
Q3 2004 11.1% 62.2% 26.7%
Q4 2004 3.8% 71.2% 25.0%
Q1 2005 2.1% 61.2% 36.7%
Q2 2005 4.0% 62.0% 34.0%
Q3 2005 4.2% 75.0% 20.8%

Note: BCCR data is not available before the fourth quarter
2002.

-------
COMMENT
-------

6. (SBU) The Central Bank of Costa Rica's figures are the
clearest indication we have seen of the harm done to Costa
Rica's investment climate by the current administration's
"go slow" approach to CAFTA and languishing fiscal reform.
LANGDALE

© Scoop Media

 
 
 
World Headlines

 

Climate Change: Record Northern Heat, Fuels Concerns Over US Wildfire Destruction

More than 78,000 acres of forest in the Sierra mountains in California has been lost due to wildfires. Photo: San Francisco Fire Department The northern hemisphere experienced its warmest August ever, the World Meteorological Organization ( WMO ... More>>

UN: Guterres Condemns Killing Of Journalists, Following Beheading Of Mexican Crime Reporter

© UNESCO | International Day to End Impunity for Crimes against Journalists. Following the gruesome death of a Mexican journalist specializing in crime reporting, who was found beheaded on Wednesday, UN chief António Guterres has issued a statement condemning ... More>>

UN: WHO Warns Against Potential Ebola Spread In DR Congo And Beyond

Ebola is spreading in a western province in the Democratic Republic of the Congo (DRC), raising fears that the disease could reach neighbouring Republic of Congo and even the capital, Kinshasa, the World Health Organization (WHO) said on Friday. ... More>>

WWF: Living Planet Report Reveals Average Two-Thirds Decline In Wildlife Populations Since 1970

According to WWF’s Living Planet Report 2020 released today, global populations* of mammals, birds, amphibians, reptiles and fish have suffered an average two-thirds decline in less than half a century. The decline is due in large part to the very ... More>>