(RTTNews) - The International Monetary Fund in a report on Monday said the recent signs of a turnaround in economic activity in Costa Rica, and a somewhat more favorable perspectives for external demand, point to a gradual recovery to the economy, going forward. Moreover, it said the medium-term prospects remained promising.

The IMF expects the economy to contract 1.5% this year, but grow by 2.3% next year. Further, the lender expects the inflation to continue to decline, to reach 5% by the year end.

Meanwhile, the lender said the medium-term prospects for the economy remained generally promising, with strong institutions and higher investment in human and physical capital providing a solid basis for the resumption of high, well-balanced economic growth.

The IMF said Costa Rica’s economy withstood the impact of the global economic and financial crisis relatively well.”The strategy to shield the economy from external shocks through fiscal stimulus and the mobilization of contingent external financing has helped preserve confidence and financial stability, and mitigated the decline of the economy”, it added.

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