Costa Rica’s economy will expand faster than forecasted this year, outpacing inflation for the first time in “recent memory,” Nomura Securities International said in a report.

Gross domestic product in Central America’s second-biggest economy will climb 5.5 percent this year, up from an earlier forecast of 4 percent, Boris Segura, a Latin America analyst for Nomura, wrote today. Inflation should remain within the central bank’s target of 5 percent, plus or minus one percentage point, the first time consumer prices are likely to trail below economic growth since 1992, the report said.

“For the first time in recent memory, Costa Rica is poised to show real GDP growth that exceeds its inflation rate,” Segura wrote. “This speaks volumes about Costa Rica’s macroeconomic stability.”

While economic growth should improve tax revenues, Costa Rica still needs to pass “full-fledged fiscal reform” to lower its deficit, according to Nomura.

Consumer prices rose 4.6 percent in June from a year earlier, the national statistics institute reported July 3.

Source: Bloomberg