The World Travel & Tourism Council's estimates indicate a direct contribution to the 2016 GDP of 5.1% and 110,000 direct jobs in Costa Rica; the total number of jobs indirectly supp… Ecotourism is extremely popular with the many tourists visiting the extensive national parks and protected areas around the country. An August 2016 OECD report provided this summary: "The road network is extensive but of poor quality, railways are in disrepair and only slowly being reactivated after having been shut down in the 1990s, seaports quality and capacity are deficient. The main highland cities in the country's Central Valley are connected by paved all-weather roads with the Atlantic and Pacific coasts and by the Pan American Highway with Nicaragua and Panama, the neighboring countries to the North and the South. agriculture: 5.5% (2016 estimate) Bananas, pineapples, coffee, beef, sugarcane, rice, corn, dairy products, vegetables, timber, fruits and ornamental plants. It says that "Costa Rica's economy is 64.8 percent free"... "the world's 49th freest economy." [33] Costa Rica had a formal line of credit with the World Bank valued at US$947 million in April 2014, of which US$645 million had been accessed and US$600 million remained outstanding. In fact, short of snow, you can find almost any weather in Costa Rica. Costa Rica’s economy revolves around foreign investment and tourism. On a per capita basis, the debt was $4,711 per person. [30], In 2014, President Solís presented a budget with an increase in spending of 19% for 2015, an increase of 0.5% for 2016 and an increase of 12% for 2017. Costa Rica was a pioneer in this type of tourism and the country is recognized as one of the few with real ecotourism. Costa Rica is rich in diverse flora and fauna which accounts for about 5% of the biodiversity in the world, even though its land area is only about 0.03% of the total world landmass. This economic model had two main problems. This fact determined the character of Costa Rica and made it different fromother Spanish colonies. [17] Costa Rica's economy emerged from recession in 1997 and has shown strong aggregate growth since then. [65] Well over half of that type of investment has come from the U.S.[66] According to the government, the zones supported over 82 thousand direct jobs and 43 thousand indirect jobs in 2015; direct employment grew 5% over 2014. It makes up about 6.5% of Costa Rica’s GDP, and employs 12.9% of the labor force (2016). The country was a backwater during the colonial period, however, and it was largely passed over by the Spanish in their search for gold. Of greater concern is the fact that a full 46% of the budget will require financing, a step that will increase the debt owed to foreign entities. They settled on coffee and sure enough, exporting the drink led to economic growth and a steady stream of money flowing in. Costa Rica is a country in Central America bordered by the Pacific Ocean and the Caribbean Sea. The Tourism Board estimates that this sector's spending in the country represented over US$3.4 billion, or about 5.8% of the GDP. Opponents of free agricultural trade have sometimes attempted to block imports of products already grown in Costa Rica, including rice, potatoes, and onions. 1 Costa Rican colon (₡) = 100 centimos, Exchange rates: Actually its economy depends mainly in tourism, which is a rapidly expanding industry, agriculture, and electronic components exports. These factors, along with an established ecotourism industry, have attracted foreign investment, which shifted the country’s once agriculture-based economy to one dominated by services and technology by the late 20th century. 2.295 million (2016) Note: 15 and older, excluding Nicaraguans living in the country[98], Labor force by occupation: Compared to salaries in the United States, Canada or Europe, Costa Rican salaries are generally low – the average salary in Costa Rica hovers around $500 per month. 4.3% (2013), Electricity production: lowest 10%: [39] "Despite all the public calls and efforts we have made since the start of my administration to contain spending and increase revenues, there is still a gap that we must close with fresh resources," he said. In the same year, the country imported goods worth $17.56 billion, with almost half coming from the USA. [35][36], The country's credit rating was reduced by Moody's Investors Service in early 2017 to Ba2 from Ba1, with a negative outlook on the rating. The report added that "financial system appears sound, and credit growth continues to be consistent with healthy financial deepening and macroeconomic trends. The person in this position acts as both head of state and head of government, with the help of two vice presidents. The vice presidents run on the same … The president may not serve consecutive terms and, according to the 2005 constitutional amendment, must wait 8 years before running again for election. [61], The combined export value of forest products and textiles in 2013 did not exceed that of either chemical products or plastics. Costa Rica’s economy also faces challenges due to a rising fiscal deficit, rising public debt, and relatively low levels of domestic revenue. industry: [96], GDP real growth rate: [84], More recently, Costa Rica reached 40th place in 2015, with a score of 55 on the Perception of Corruption scale; this is better than the global average. Many tourists look on Costa Rica as a good investment in terms of a business in the tourism sector or simply to retire. [74] Costa Rica's outward foreign direct investment stock is small, at about 3 percent of Board Discussions on Costa Rica. The country was a backwater during the colonial period, however, and it was largely passed over by the Spanish in their search for gold. In spite of government attempts at improving the enforcement of intellectual property laws, this aspect remains a concern. Costa Rica recorded a Government Budget deficit equal to 5.70 percent of the country's Gross Domestic Product in 2019. [52] The World Travel & Tourism Council's estimates indicate a direct contribution to the 2016 GDP of 5.1% and 110,000 direct jobs in Costa Rica; the total number of jobs indirectly supported by tourism was 271,000.[53]. The total exports in 2015 were US$12.6 billion, down from $18.9B in 2010; bananas and medical instruments were the two largest sectors. This is far from the whole story, however, as agricultural and manufactured goods only make up around 30 percent of the country’s GDP. In the United States, it is a mixed market economy meaning that we use capitalism but we also have socialistic principles (free education, Medicaid, Medicare, etc). © Copyright 2004-2021 all rights reserved. Despite this, around 25 percent of the population live on or below the poverty line. Costa Rica applied to become a member of the OECD Anti-Bribery Convention, to be effective in July 2017.[86][87]. Economy - overview: Since 2010, Costa Rica has enjoyed strong and stable economic growth - 3.8% in 2017. [77], Costa Rica's infrastructure has suffered from a lack of maintenance and new investment. How to interpret the graph: The purpose of this graph is to take a snapshot of a country’s economy in comparison to other economies. Such steps are essential, Solís told the nation. This is in stark contrast to some of its neighbors, for whom the money send back by expats in countries like the USA can make up a significant portion of the money entering the nation. The economy of Costa Rica has been very stable for some years now, [6], Inflation remained around 4% to 5% per annum for several years up to 2015 but then dropped to 0.7% in 2016; it was expected to rise to a still moderate 2.8% by the end of 2017[19] In 2017, Costa Rica has one of the highest standards of living in Central America[20] in spite of the high poverty level, which dropped by 1.2% in 2017 to 20.5% thanks to reducing inflation and benefits offered by the government. Prior to the global economic crisis, Costa Rica enjoyed stable economic growth. Costa Rica also charges licensing fees for commercial fishing fleets[43][44] that are taking tuna, sardines, banga mary, mahi-mahi, red tilapia, shrimp, red snapper, other snappers, shark, marlin and sailfish. Other services which contribute to the country’s GDP include communications, retail, financial services, and insurance. Thanks to its diverse geography, the Costa Rica climate is quite varied. The ports, roads, water systems would benefit from major upgrading. Most of the tourists come from the U.S. and Canada (46%), and the EU (16%),[55] the prime market travelers in the world, which translates into a relatively high expenditure per tourist of $1000 per trip. with continuing growth in the GDP (Gross Domestic Product) and moderate inflation, though with a high unemployment rate: 11.49% in 2019. [26], The following table shows the main economic indicators in 1980–2017. There were no c… The magazine Travel Weekly named Costa Rica the best destination in Central and South America in 2011. [40][79], Most parts of the country are accessible by road. Costa Rica’s economic freedom score is 65.8, making its economy the 68th freest in the 2020 Index. Costa Rica Executive Board Calendar. Costa Rica has sought to widen its economic and trade ties, both within and outside the region. [32] The practice was a double-edged sword, however, and it left them dangerously reliant on their product of choice. Following civil war in the 1940′s, Costa Rica ended rule by armed forces and established a democratic republic. In addition to the legal aspects of working in Costa Rica, it is important to consider practical concerns. Moody's was also concerned about the "lack of political consensus to implement measures to reduce the fiscal deficit [which] will result in further pressure on the government's debt ratios". In the early days about the only farming that was feasible in the Meseta Central (centraltable-land) was subsistence farming. Costa Rica was more aware of this problem than many of their neighbors, and they took steps to diversify their economy. Costa Rica has a stable economy and a relatively high standard of living. 8.1% (2017 estimate)[6], Budget: US15.9 billion (2017 proposed) Note: 46% will require financing[38], Industries: Through the government's sustained social spending - almost 20% of GDP annually - Costa Rica has made tremendous progress toward achieving its goal of providing universal access to education, healthcare, clean water, sanitation, and electricity. [82], According to transparency.org, Costa Rica had a reputation as one of the most stable, prosperous, and among the least corrupt in Latin America in 2007. Poverty has remained around 20-25% for nearly 20 years, and the government’s strong social safety net has eroded due to increased constraints on its expenditures. Product registration is a slow process, although this may improve with digitization. Article IV Staff Reports Financial Position in the Fund Financial Sector Assessment Program Transactions with … By 2016, 2.6 million tourists visited Costa Rica. Costa Rica's main cash crop, historically and up to modern times, was Bananas. My Costa Rica (CostaRica.Org) is a Travel Agency that offers Custom Costa Rica Vacations & Packages Including Hotels, All-Inclusive Resorts and Tours. Agriculture Industry. [6], Government bond ratings: (January 2017) Standard & Poor's: BB-; Moody's: Ba2[97][37], Budget deficit: 6.1 percent of the GDP[30], Population below poverty line: Explore Costa Rica from one coast to the other! Government Budget in Costa Rica averaged -3.38 percent of GDP from 1991 until 2019, reaching an all time high of 0.60 percent of GDP in 2007 and a record low of -5.70 percent of GDP in 2019. The TTCI report also notes Costa Rica's main weaknesses, ground transport infrastructure (ranked 113th), and safety and security (ranked 128th). Foreign investors are mainly interested in beach properties by the Pacific coast. [69][70] In 2014, Intel announced it would end manufacturing in Costa Rica and lay off 1,500 staff but agreed to maintain at least 1,200 employees. [51] By 2016, 2.6 million tourists visited Costa Rica. Costa Rica car rental bookings at the best prices in the market. This perception is certainly true in many parts of the country. [29], A 2016 report by the U.S. government report identifies other challenges facing Costa Rica as it works to expand its economy by working with potential foreign investors:[40]. Costa Rica has bilateral free trade agreements with the following countries and blocs which took effect on (see date): There are no significant trade barriers that would affect imports and the country has been lowering its tariffs in accordance with other Central American countries. Since 1949, the Costa Rican government has been a stable democracy that is governed by a strong, democratic constitution. The bill in congress was intended to "protect the extraordinary marine and coastal resources" from "indiscriminate and unsustainable commercial fishing." A full 10.27% of the country is protected as national parks while an additional 17% is set aside for reserves, wildlife refuges and protected zones. [29] When the 2017 budget was finally proposed, it totaled US$15.9 billion. The result was a tiny economy with most inhabitants practicing small-scale farming and trade in agricultural products. Firstly, when the global value of the product dropped, the country would experience a sudden and dramatic drop in income. [6], The country has evolved from an economy that once depended solely on agriculture, to one that is more diverse, based on tourism, electronics and medical components exports, medical manufacturing and IT services. [20][22] Corporate services for foreign companies employ some 3% of the workforce. Costa Rica’s economy also faces challenges due to a rising fiscal deficit, rising public debt, and relatively low levels of domestic revenue. Costa Rica has coastal plains separated by rugged mountains including over 100 volcanic cones, of which several are major volcanoes. With, for example, the abolishment of their army, Costa Rica has been able to invest into social security and education, like the almost free University of Costa Rica. Since there were no sources of gold in Costa Rica those who came came to farm. [75] By 2016, 2.6 million tourists visited Costa Rica, spending roughly US$3.4 billion. [21][20] The estimated unemployment level in 2017 is 8.1%, roughly the same as in 2016. [37] In late July 2017, the Central Bank estimated the budget deficit at 6.1 percent of the country's GDP. [56] Just considering the subindex measuring human, cultural, and natural resources, Costa Rica ranks in the 24th place at a worldwide level, and 7th when considering just the natural resources criteria. When you’re planning a Costa Rica vacation, it’s a good idea to understand the ra… Costa Rica recorded a trade deficit of 262.98 USD Million in October of 2020. Internal transportation overly relies on private road vehicles as the public transport system, especially railways, is inadequate. Exports of bananas, coffee, sugar, and beef are the backbone of its commodity exports. Venezuela would probably be better described as a socialist (command) economy especially since Chavez became the president. services: [60], Costa Rica's economy was historically based on agriculture, and this has had a large cultural impact through the years. Companies in such zones must export at least 50% of their services. [40], In 2015 the following were the major export products (US$): medical instruments ($2 billion), bananas ($1.24B), tropical fruits ($1.22B), integrated circuits ($841 million) and orthopedic appliances ($555M). In 2016, 98.1 per cent of the country's electricity came from green sources: hydro generating stations, geothermal plants, wind turbines, solar panels and biomass plants. Costa Rica's current and stable economic performance indicators have mainly depended on tourism, real estate, agriculture, investment & business, commodity and electronics manufacturing and trading industries. Mostly a market economy with some socialist protections and a few state sponsored monopolies. The agency noted that the fiscal deficit remains high and public debt continues to rise rapidly despite the authorities’ deepened consolidation efforts in 2016. [18][6] The total debt in 2015 was $22.648 billion, up by nearly $3 billion from 2014. [49] The World Economic Forum's 2017 Travel & Tourism Competitiveness Report ranked Costa Rica as third of 136 countries based on natural resources, the number of World Heritage natural sites, protected areas and species as well as eco tourism. The outstanding health indicators of Costa Rica have been known for decades. To address this issue, he promised that a higher VAT and higher income tax rates were being considered by his government. A 2017 study by the Organisation for Economic Co-operation and Development warned that reducing the foreign debt must be a very high priority for the government. The nativepopulation was too sparse to support plantation agriculture so those who came came to do theirown farming. $107.1 million (1995), Currency: Poverty has remained around 20-25% for nearly 20 years, and the government’s strong social safety net has … Nonfood imports include insecticides and other chemicals, machinery, and crude oil and petroleum products. Costa Rica's political stability, high standard of living, and well-developed social benefits system set it apart from its Central American neighbors. GDP as of 2011, and mainly concentrated in Central America (about 57 percent of the total outward direct investment stock). Costa Rica's economic history to forecast:. Note: Percentile ranks are calculated using the latest available data for all countries within the last 5 years. Costa Rica signed a bilateral trade agreement with Mexico in 1994, which was later amended to cover a wider range of products. Other fiscal reforms were also recommended to moderate the budget deficit. [45] In mid 2017, the country was planning to ban large-scale commercial fishing off the southern Pacific Coast in an area nearly a million acres in size. [95], In 2015, the top export destinations for all types of products were the United States (US$4.29 billion), Guatemala ($587 million), the Netherlands ($537 million), Panama ($535 million) and Nicaragua ($496 million). These sensible policies meant that although the Costa Rica economy was hit by the 2008 Global Financial Crisis, it recovered fairly quickly and by 2010 the economy was growing at 4 percent a year. Save with Economy Costa Rica Rent a Car and guarantee your reservation. In fact, its economy depends mainly on tourism, which is a rapidly expanding industry, agriculture and the export of electronic components. bananas, pineapples, other tropical fruits, coffee, palm oil, sugar, corn, rice, beans, potatoes, beef, timber, Major export commodities: Medical Instruments ($2B), Bananas ($1.24B), Tropical Fruits ($1.22B), Integrated Circuits ($841M) and Orthopedic Appliances ($555M). The economy contracted 0.7% in 2009, but resumed growth at more than 3% in 2010. The journey to either coast was over mountains and throughdifficult lowlands. The bureaucracy is "often slow and cumbersome". The country has been slow in completing environmental impact assessments which have caused delays in projects being completed. "[81], The government hopes to bring foreign investment, technology, and management into the telecommunications and electrical power sectors, which are monopolies of the state. [92] Costa Rica also is a member of the Cairns Group,[93] an organization of agricultural exporting countries that are seeking access to more markets to increase the exports of agricultural products. [94] By 2015, Costa Rica's agricultural exports totalled US$2.7 billion. Balance of Trade in Costa Rica averaged -272.42 USD Million from 1994 until 2020, reaching an all time high of 139.55 USD Million in April of 1999 and a record low of -661.40 USD Million in October of 2012. It is mixed. Aeropuerto Internacional Juan Santamaria", "The Travel & Tourism Competitiveness Report 2008", "País segundo en competitividad turística en América Latina", "Costa Rica racks up international awards -", "Costa Rica Tourism Board on World Travel Awards", "inec.go.cr: "Estadisticas de Comercio Exterior, 2013", "Costa Rica - Location, Geography, People, Culture, Economy, & History", "The Investment Promotion Agency of Costa Rica", "Okay Industries Expands Operation in Costa Rica and Reinvests US$ 2 Million", "Intel supone el 4,9 por ciento del PIB de Costa Rica", "Intel fabrica el procesador "más veloz del mundo" en Costa Rica", "Intel closes Costa Rica operation, cuts 1,500 jobs", "imf.org: "Costa Rica: Selected Issues – IMF Country Report No. ), Inflation rate (consumer prices): Related Links. [39], In early August 2017, President Luis Guillermo Solís admitted that the country was facing a "liquidity crisis", an inability to pay all of its obligations and to guarantee the essential services. Around 30 percent of these products went to the USA, with a further 13.2 percent going to China. 13/80" Mar 2013", "País cierra el año con llegada de 1,9 millones de turistas", "All that glitters is not green: Costa Rica's renewables conceal dependence on oil", "Costa Rica's electricity was produced almost entirely from renewable sources in 2016", "Is infrastructure Costa Rica's Achilles' heel? 1.2% [27] By August 2017, Costa Rica was having difficulty paying its obligations and the President promised dramatic changes to handle the "liquidity crisis". Costa Rica joined other Central American countries, plus the Dominican Republic, in establishing a Trade and Investment Council with the United States in March 1998, which later became the Dominican Republic–Central America Free Trade Agreement. [53], Costa Rica has not discovered sources of fossil fuels—apart from minor coal deposits—but its mountainous terrain and abundant rainfall have permitted the construction of a dozen hydroelectric power plants, making it self-sufficient in all energy needs, except for refined petroleum. The Tourism Board estimates that this sector's spending in the country represented over US$3.4 billion, or about 5.8% of the GDP. Neighboring countries include Nicaragua and Panama. The following link is a bit right leaning, but it will give you a good idea of related factors. Home » Costa Rica Facts » Costa Rica Economics. [52] Tourism directly supported 110,000 jobs and indirectly supported 271,000 in 2016. When you think of Costa Rica, you probably think of hot steamy weather and endless sunshine. The crisis was occurring in spite of growth, low inflation and continued moderate interest rates, Solís concluded. After extensive legal proceedings Calderon and Rodriguez were sentenced; however, the inquiry on Figueres was dismissed and he was not charged. Recent advances in fiscal consolidation have been partly reversed and political consensus on a comprehensive fiscal package remains elusive". [58], The online travel magazine Travelzoo rated Costa Rica as one of five “Wow Deal Destinations for 2012”. The local currency is called the Costa Rican colon with a foreign exchange rate of around 600 colones to the dollar. [26], The growing debt and budget deficit are the country's primary concerns. The surrounding countries had made huge fortunes by focusing on cash crops such as sugar or tobacco, and after indep… They have insufficient capacity, and their equipment is in poor condition. Thanks to its stable and developed economic base, Costa Ricans enjoy a higher standard of living than other Central American countries like neighbor Nicaragua and also has a stronger growth rate in terms of social, political and economic matters. Its government is popular, representative, alternative and responsible, exercised by three supreme powers which are distinct and independent of each other: Executive Power, Legislative Power and Judicial Power. The country has established itself as a leading producer of electronic circuitry and pharmaceuticals, as well as medical instruments. Of these, tourism is one of the most critical sectors, and over the last 25 years, it has grown rapidly. The second problem was that often, more developed countries would buy the raw products, process them into finished goods, and then sell them back to Latin American countries at a higher price. Costa Rica imports staples such as corn (maize) and beans (which it could produce but does not) from its neighbours, along with products such as wheat (from the United States), for which the Costa Rican climate is not suitable. While the traditional agricultural exports of bananas, coffee, sugar, and beef are still the backbone of commodity export trade, a variety of industrial and specialized agricultural products have broadened export trade in recent years. [78] The country has an extensive road system of more than 30,000 kilometers, although much of it is in disrepair; this also applies to ports, railways and water delivery systems. Costa Rica experienced steady growth during the past several years, but in 2009, the economy shrank by 2.5%, largely on account of the global economic recession. Costa Rica and Laura Chinchilla just sold the soul of Costa Rica. [40][73], The fastest growing aspect of the economy is the provision of corporate services for foreign companies which in 2016 employed approximately 54,000 people in a country with a workforce under 342,000; that was up from 52,400 the previous year. The country Costa Rica has a GDP of $71 billion, making it the 77th most powerful economy globally and the 10th most influential in Latin America. [61], Mere decades ago, Costa Rica was known principally as a producer of bananas and coffee. From cold, misty mountains to hot, humid rainforest. [67][68], In 2006 Intel's microprocessor facility alone was responsible for 20% of Costa Rican exports and 4.9% of the country's GDP. [78] According to a 2016 U.S. government report, investment from China which attempted to improve the infrastructure found the "projects stalled by bureaucratic and legal concerns". I have just enacted a law to facilitate Public Private Partnerships, which are the ideal way to develop projects that are too large for the government to undertake. [28], Solís explained that the Treasury will prioritize payments on the public debt first, then salaries, and then pensions. Renewable energy in Costa Rica is the norm. The railroad didn't function for several years, until recent government effort to reactivate it for city transportation. 20.5% (2017)[21], Household income or consumption by percentage share: Costa Rica is also known for its strong commitment to the environment and for protecting its numerous national parks. [59] In 2017, the country was nominated in the following categories in the World Travel Awards: Mexico & Central America's Leading Beach Destination, Mexico & Central America's Leading Destination and Mexico & Central America's Leading Tourist Board. Located inside airport terminals with service at over 100 locations. Costa Rica - Market OverviewCosta Rica - Market Overview Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements. Costa Rica has over 50 wildlife refuges, 32 major national parks, more than 12 forest reserves and a few biological reserves. [50], With a $1.92-billion-a-year tourism industry, Costa Rica was the most visited nation in the Central American region, with 2.42 million foreign visitors in 2013. Additionally, it is working on making its economy sustainable as well as powerful and weeding out inequality. Although the Costa Rican economy is not as powerful as that of the USA or the European nations, it certainly punches above its weight and was lucky enough to recover quickly from the global financial crisis. [26], Export partners (2016): United States ($4.29B), Guatemala ($587M), the Netherlands ($537M), Panama ($535M), Nicaragua ($496M)[26], Major import commodities: Refined Petroleum ($1.26B), Cars ($702M), Packaged Medicaments ($455M), Broadcasting Equipment ($374M) and Computers ($281M). US$26.2 billion (January 2016), Economic aid – recipient: 2.6% (2017 estimate)[6], Labor force: [30][31], One of the country's major concerns is the level of the public debt, especially as a percentage of the GDP (Gross Domestic Product), increasing from 29.8% in 2011 to 40.8% in 2015 and to 45% in 2016. Total imports in 2015 were US$15 billion, somewhat higher than the total exports of a US$12.6 billion, for a negative trade balance of US$2.39 billion. Since 1848, the flag and shield have been used as the official symbols and the basic unit of currency was called the colón—named after Christopher Columbus, whose name in Spanish is Cristobal Colón. 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