Caribbean & Central America - August 2012 (ISSN 1741-4458)

The bad news keeps accumulating and President Laura Chinchilla seems unable to reverse the trend that costs her approval ratings several percentage points in public opinion surveys month after month. In the latest Unimer poll, conducted between 5 and 11 July, the index of trust in the government (ICG) fell for the seventh month running, closing at its lowest historic point since the index’s creation in 2003.

The ICG measures levels of trust in the government in relation to corruption, its ability to resolve pressing problems and more general perceptions of the president’s and the cabinet’s performance. It is calculated on a scale from 1 to 5, with the former indicating total distrust and the latter absolute trust. In July, it posted at an embarrassing 0.871, making the Chinchilla government the one with the highest perception of corruption and administrative ineptitude since records began. In fact, the perception that the government is corrupt rose from 60% in April to 75% in July, partly as the result of several corruption scandals [RC-12-05], including one involving a cabinet member [RC-12-04].

The overall government performance reflects a similar drop in the president’s own image, with 53% of the 1,200 respondents saying her work is “bad” or “very bad” and only 13% rating her performance as “good” or “very good”. Making matters worse for the president, when all economic worries are grouped together (i.e. unemployment, increasing cost of living and the general state of the economy), the latest Unimer poll shows that the economy is now the chief concern for Costa Ricans (35%), overtaking security (27%), which has traditionally topped the survey during Chinchilla’s government. (It is worth noting, however, that in the June 2011 poll, security concerns topped the list with 49% and the improvement in this indicator came despite the direct involvement of a Costa Rican national in the leadership of a drug trafficking organisation [RC-12-07].)

In macroeconomic terms, however, the Costa Rican economy is doing very well with the central bank (BCCR) raising its annual GDP growth forecast for 2012 to 5.5%, from 4% previously. (The BCCR has yet to release GDP figures for June.) Similarly, inflation is expected to come in at the targeted 5% (+/-1%) - consumer prices rose 4.6% in June from a year earlier, according to the latest figures by the national statistics institute (Inec).

In the first six months of the year, the export of goods grew 10.9% when compared with the same period of 2011, reaching a record US$5.85bn. Undoubtedly, the export of Intel microchips lead the way, with a 43.4% rise when compared with the same period a year earlier, posting at a total of US$1.15bn. The export of services also posted impressive growth of 15.1%, bringing in a total of US$1.59bn. This performance has put Costa Rica on track to surpassing its target of US$15bn in total exports by year end.

Thus for the first time in several decades, Costa Rica is poised to show real GDP growth that exceeds its inflation rate, which should be music to the president’s ears and result in some improvement in the polls over coming months. But perceptions are not as straight forward as indicators and as unemployment worries increase, the government’s grades may continue to worsen.

According to the Inec, unemployment in the first half of 2012 reached 10.4%, posting a significant increase when compared with the 9.6% recorded during the same period of 2011 - but showing a slight improvement when compared with the 10.9% posted in the last quarter of 2011. According to Minister of Planning Roberto Gallardo, 150,000 jobs have been created over the past year, but an increasing number of people are searching for work and job supply simply cannot keep up with demand.

• FTA with Colombia

In late July, the negotiating teams of Costa Rica and Colombia met for the first round of talks towards the establishment of a bilateral Free Trade Agreement (FTA) in northern Bogotá. While the meeting was intended to set up the legal framework for negotiations, the leaders of the two negotiating teams, Javier Humberto Gamboa Benavides for Colombia and Fernando Ocampo for Costa Rica, have hinted that four controversial agricultural products (coffee, sugar, flowers and bananas) will be left out of the deal and only incorporated at a future date.