- Category: The Nation
- Published on Monday, February 27 2012 01:35
- Written by Rod Hughes
- Hits: 806
Despite fears that rising petroleum prices may endanger this country's economic growth this year, (see article last Saturday) in the short term at least, the local economy seems to be improving briskly.
For example, production of goods and services rose 7% in December over the same month of 2010, both imports and exports rose and even credit showed signs of increasing.
Moreover, an increase in businesses registered as sociedades anonimos (bearer share corporation) rose. Even tax revenues are up in the past months, reflecting higher income from business.
Nor is this all on paper, the leading newspaper La Nacion reported Friday. Business persons and economist consulted by the paper all concur -- the better economy is real, not just wishful thinking. But all are keeping a nervous eye on the budget deficit and the progress of tax reform.
The deficit could raise interest rates and put the government into competition with private enterprise for credit. Add to that the European economic woes that could affect foreign trade.
But in general optimism reigns among small and medium sized businesses, industrial policy advisor Pedro Morales told the paper. Chamber of Commerce president Arnold Andre agrees -- if the fiscal deficit does not force banks to raise interest rates.
Alberto Trejos, economist of the CEFSA firm, also agrees that the bright business picture is very real and not just perception, but he also is wary of a possible credit crunch caused by the budget gap.
But Trejos looks ahead and urges continued emphasis on such longer term measures as education improvements, increases in competitive capacity as well as encouragement of direct foreign investment.