In the 2008 Travel and Tourism Competitiveness Index (TTCI), Costa Rica reached the 44th place in the world ranking, being the first among Latin American countries, and second if the Caribbean is included. The surrounding countries had made huge fortunes by focusing on cash crops such as sugar or tobacco, and after indep… 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. Another sign of Costa Rica’s financial strength is the fact that remittances have almost no effect on the country’s economics. Costa Rica has a mixed economy in which both public and private companies play an important role. You won’t regret it for one minute. As of 2012, 11.5 percent of the Costa Rican labor force was employed in tourism. Despite this, around 25 percent of the population live on or below the poverty line. Costa Rica has sought to widen its economic and trade ties, both within and outside the region. 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. The group also recommended taking steps to reduce pension benefits and increase the amount of contribution by the public and increasing the cost effectiveness of the education system. 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. 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. 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. Economy - overview: Since 2010, Costa Rica has enjoyed strong and stable economic growth - 3.8% in 2017. [17] Costa Rica's economy emerged from recession in 1997 and has shown strong aggregate growth since then. Costa Rica’s economy revolves around foreign investment and tourism. The working population is employed in a variety of sectors, but those working in primary and secondary roles produced $11.66 billion worth of exports in 2013. purchasing power parity: $12,382 (2017 estimate)[6], GDP composition by sector: They settled on coffee and sure enough, exporting the drink led to economic growth and a steady stream of money flowing in. [74], Tourism is an important part of the economy, with the number of visitors increasing from 780,000 in 1996, to 1 million in 1999, and to 2.089 million foreign visitors in 2008, allowing the country to earn $2.144-billion in that year. Other fiscal reforms were also recommended to moderate the budget deficit. [29] When the 2017 budget was finally proposed, it totaled US$15.9 billion. [25] Companies with facilities in the America Free Zone in Heredia, for example, include Dell, HP, Bayer, Bosch, DHL, IBM and Okay Industries. 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. Explore Costa Rica from one coast to the other! Note: Percentile ranks are calculated using the latest available data for all countries within the last 5 years. Costa Rica car rental bookings at the best prices in the market. 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". Additionally, it is working on making its economy sustainable as well as powerful and weeding out inequality. 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. To address this issue, he promised that a higher VAT and higher income tax rates were being considered by his government. One-fourth of Costa Rica's land is dedicated to national forests, often adjoining beaches, which has made the country a popular destination for affluent retirees and ecotourists. [37] In late July 2017, the Central Bank estimated the budget deficit at 6.1 percent of the country's GDP. Save with Economy Costa Rica Rent a Car and guarantee your reservation. Other services which contribute to the country’s GDP include communications, retail, financial services, and insurance. Depending on location and altitude, many regions differ in agricultural crops and techniques. [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. [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). Many of these are fruits: pineapple, oranges, melon, papaya, passion fruit, starfruit, guava, mangos, avacados, cas, lemons, blackberries, mamones chinos, tamarindo, maranon, watermelon, cateloupe, and pejibaye. They have insufficient capacity, and their equipment is in poor condition. © Copyright 2004-2021 all rights reserved. Many work in the free-trade areas such as Zona Franca America and earn roughly double the national average for service work. [18][6] The total debt in 2015 was $22.648 billion, up by nearly $3 billion from 2014. Costa Rica’s economy also faces challenges due to a rising fiscal deficit, rising public debt, and relatively low levels of domestic revenue. Related Links. Costa Rica has a fairly low level of unemployment, with just 7.9 percent of the population out of work. Costa Rica's ports are struggling to keep pace with growing trade. with continuing growth in the GDP (Gross Domestic Product) and moderate inflation, though with a high unemployment rate: 11.49% in 2019. [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. [54] Other important market segments are adventure, sun and beaches. 1.2% Renewable energy in Costa Rica is the norm. Recent advances in fiscal consolidation have been partly reversed and political consensus on a comprehensive fiscal package remains elusive". [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. When you adjust the GDP scores to take population into account, Costa Rica moves up to 75th place and sits just above the global average. 9.473 billion kWh (2010), Electricity production by source: 98.1% from "green sources" (2016)[77], Agriculture products: The coffee crop had been a major export, but decreased in value to the point where it added only 2.5% to the 2013 exports of the country. [61], Agriculture also plays an important part in the country's gross domestic product (GDP). This sector generated US$4.6 billion in 2016, nearly as much as tourism. This perception is certainly true in many parts of the country. [40][79], Most parts of the country are accessible by road. It makes up about 6.5% of Costa Rica’s GDP, and employs 12.9% of the labor force (2016). Prior to the global economic crisis, Costa Rica enjoyed stable economic growth. Actually its economy depends mainly in tourism, which is a rapidly expanding industry, agriculture, and electronic components exports. Around 30 percent of these products went to the USA, with a further 13.2 percent going to China. 39.5% (2009 est. microprocessors, food processing, textiles and clothing, construction materials, fertilizer, plastic products, Industrial production growth rate: 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. 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. Total imports in 2015 were $15B, up from $13.8B in 2010; this resulted in a trade deficit. In fact, short of snow, you can find almost any weather in Costa Rica. [83] However, in fall 2004, three former Costa Rican presidents, José María Figueres, Miguel Angel Rodríguez, and Rafael Angel Calderon, were investigated on corruption charges related to the issuance of government contracts. Costa Rica is a democratic, free and independent republic. Costa Rica was more aware of this problem than many of their neighbors, and they took steps to diversify their economy. This fact determined the character of Costa Rica and made it different fromother Spanish colonies. Meat and dairy produce are leading exports according to one source,[64] but both were not in the top 10 categories of 2013. 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). For example, Amazon.com employs some 5,000 people. In the past decade, Costa Rica has attracted businesses from the United States, including IBM, Dell, and Western Union. 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. Tariffs applied by Costa Rica as provided by ITC's, This page was last edited on 8 December 2020, at 21:03. 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’s exports then, consist of many different products, and besides those already mentioned, it also produces ornamental plants, seafood, and beef. 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. Today just 7.6 percent of their exports consist of bananas and coffee, with a further 6.7 percent coming from other fruits and vegetables. The crisis was occurring in spite of growth, low inflation and continued moderate interest rates, Solís concluded. 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. This is far from the whole story, however, as agricultural and manufactured goods only make up around 30 percent of the country’s GDP. On a per capita basis, the debt was $4,711 per person. The agency particularly cited the "rising government debt burden and persistently high fiscal deficit, which was 5.2% of GDP in 2016". [47][48], In terms of the 2012 Environmental Performance Index ranking, Costa Rica is 5th in the world, and first among the Americas. No, Costa Rica has a very stable economy and they know how to keep there job. Product registration is a slow process, although this may improve with digitization. I am really sorry for those who have lost there jobs, but Costa Rica is not a poor country and they are not rich either. Costa Rica declared its independence from the mother country and later established itself as an independent republic—and with that came a new currency. 4.3% (2013), Electricity production: Costa Rica has coastal plains separated by rugged mountains including over 100 volcanic cones, of which several are major volcanoes. Costa Rica's rainfall, and its location in the Central American isthmus, which provides easy access to North and South American markets and direct ocean access to the European and Asian Continents. [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. 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. Costa Rica's main cash crop, historically and up to modern times, was Bananas. [74] Costa Rica's outward foreign direct investment stock is small, at about 3 percent of Between 1980 and 1982 the economy contracted by … Every Saturday and Sunday in each small town is a farmers market that displays a diversity of produce available in Costa Rica, mainly items that have not been exported. 1 Costa Rican colon (₡) = 100 centimos, Exchange rates: [38] In late July 2017, the Central Bank estimated the budget deficit at 6.1 percent of the country's GDP. [25] In 2015, exports totalled US$12.6 billion while imports totalled US$15 billion for a trade deficit of US$2.39 billion. 8.1% (2017 estimate)[6], Budget: US15.9 billion (2017 proposed) Note: 46% will require financing[38], Industries: From cold, misty mountains to hot, humid rainforest. The country was a backwater during the colonial period, however, and it was largely passed over by the Spanish in their search for gold. 18.6% (2016 estimate) Electronic components, food processing, textiles and apparel, construction materials, cement, fertilizer. This means that the country’s development is spread fairly evenly across the population, and that – for the most part – certain regions or sectors of the population have not been left behind. The ports, roads, water systems would benefit from major upgrading. 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. In the early 1980s, as was the case in much of Latin America, Costa Rica suffered its worst economic crisis in decades. The emphasis in the economy has been placed on the governmental promotion of human development and welfare, while still allowing private companies to operate in some industries. [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$600 million remained outstanding. [71] In 2017, Intel had 2000 employees in the country, and was operating a facility which assembles, tests and distributes processors[72] and a Global Innovation Center, both in Heredia. In spite of government attempts at improving the enforcement of intellectual property laws, this aspect remains a concern. 4.3% (2017 estimate), GDP per capita: [40], In 2015 the following were the major export products (US$): medical instruments ($2 billion), bananas ($1.24B), tropical fruits ($1.22B), integrated circuits ($841 million) and orthopedic appliances ($555M). Opponents of free agricultural trade have sometimes attempted to block imports of products already grown in Costa Rica, including rice, potatoes, and onions. Costa Rica recorded a trade deficit of 262.98 USD Million in October of 2020. It says that "Costa Rica's economy is 64.8 percent free"... "the world's 49th freest economy." The executive branch is led by the president of Costa Rica, who is elected by the general population to serve a term of 4 years. 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 economy of Costa Rica has been very stable for some years now, 75.9% (2016 estimate) Hotels, restaurants, tourist services, banks, call centers and insurance. Costa Rica is also known for its strong commitment to the environment and for protecting its numerous national parks. [94] By 2015, Costa Rica's agricultural exports totalled US$2.7 billion. Exporting cash crops benefit many countries in the Latin American region, and it became the bedrock of most of their economies. The country needs even more workers who are fluent in English and languages such as Portuguese, Mandarin and French. This was supplemented by the growth of banana plantations on the Caribbean coast. The bureaucracy is "often slow and cumbersome". 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. Costa Rica was the first country in the world to constitutionally abolish its army. My Costa Rica (CostaRica.Org) is a Travel Agency that offers Custom Costa Rica Vacations & Packages Including Hotels, All-Inclusive Resorts and Tours. 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. The TTCI report also notes Costa Rica's main weaknesses, ground transport infrastructure (ranked 113th), and safety and security (ranked 128th). The following link is a bit right leaning, but it will give you a good idea of related factors. [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. The economy contracted 0.7% in 2009, but resumed growth at more than 3% in 2010. 2.295 million (2016) Note: 15 and older, excluding Nicaraguans living in the country[98], Labor force by occupation: [28], Solís explained that the Treasury will prioritize payments on the public debt first, then salaries, and then pensions. [61], The combined export value of forest products and textiles in 2013 did not exceed that of either chemical products or plastics. [96], GDP real growth rate: Following civil war in the 1940′s, Costa Rica ended rule by armed forces and established a democratic republic. Debt payments account for one-third of that amount. The practice was a double-edged sword, however, and it left them dangerously reliant on their product of choice. [85] In late May 2017, the country Countries with the lowest perceived corruption rated 90 on the scale. "[81], The government hopes to bring foreign investment, technology, and management into the telecommunications and electrical power sectors, which are monopolies of the state. Like the rest of Latin America, Costa Rica started off as a Spanish colony, and its function was to produce goods to enrich the Spanish monarchy. GDP as of 2011, and mainly concentrated in Central America (about 57 percent of the total outward direct investment stock). "Of course Costa Rica’s infrastructure deficit is a challenge that outlasts any one government and I hope that we have created the foundations for future administrations to continue building. [61], Mere decades ago, Costa Rica was known principally as a producer of bananas and coffee. [52] Tourism directly supported 110,000 jobs and indirectly supported 271,000 in 2016. The railroad didn't function for several years, until recent government effort to reactivate it for city transportation. By comparison, 18.57% work in industry and 69.02 percent in the services sector.[24]. 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. Ecotourism is extremely popular with the many tourists visiting the extensive national parks and protected areas around the country. [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. 2.6% (2017 estimate)[6], Labor force: Manufacturing and industry's contribution to GDP overtook agriculture over the course of the 1990s, led by foreign investment in Costa Rica's Free Trade Zones (FTZ) where companies benefit from investment and tax incentives. [57] Costa Rica Economy. [23], In 2013, the total FDI stock in Costa Rica amounted to about 40 percent of GDP, of which investments from the United States accounted for 64 percent, followed by the United Kingdom and Spain with 6 percent each. 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). While Costa Rica has gained immense popularity for its development of a successful, yet environmentally friendly , ecotourism industry, environmentalists and economists alike debate whether an economy centered on tourism produces more good than harm. For example, Costa Rica’s Exports rank is higher than (please wait...) of the countries in the dataset. Many tourists look on Costa Rica as a good investment in terms of a business in the tourism sector or simply to retire. The main agricultural exports from the country include: bananas, pineapples (the second highest export, with over 50% share of the world market),[62] other tropical fruits, coffee (much of it grown in the Valle Central or Meseta Central),[63] sugar, rice, palm oil, vegetables, tropical fruits, ornamental plants, maize, and potatoes. This means that not only is their reliance on one product diminished, but they are also manufacturing finished goods. After extensive legal proceedings Calderon and Rodriguez were sentenced; however, the inquiry on Figueres was dismissed and he was not charged. Since there were no sources of gold in Costa Rica those who came came to farm. Such steps are essential, Solís told the nation. 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. [21][20] The estimated unemployment level in 2017 is 8.1%, roughly the same as in 2016. Of the $8.1 billion in exports, microchips and medical equipment have finally outpaced agriculture, a recent shift away from historic trends. The top import origins were the United States ($6.06 billion), China ($1.92 billion), Mexico ($1.14 billion), Japan ($410 million) and Guatemala ($409 million). Costa Rica’s economic freedom score is 65.8, making its economy the 68th freest in the 2020 Index. 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. [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]. In the early days about the only farming that was feasible in the Meseta Central (centraltable-land) was subsistence farming. [46], Sport fishing is an important part of the tourism industry; species include marlin, sailfish, dorado, tarpon, snook, rooster fish, wahoo, tuna, mackerel, snapper and rainbow bass. Check out all the natural spots this little country has to offer you. Board Discussions on Costa Rica. Costa Rican colones (₡) per US$1 – 526.46 (March 27, 2015), US$1 – 600 (late May 2017), US$1 – 563 (end of July 2017)[99] 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 a stable economy and a relatively high standard of living. [23] Of the GDP, 5.5% is generated by agriculture, 18.6% by industry and 75.9% by services (2016). 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. [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. [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. 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. [60], Costa Rica's economy was historically based on agriculture, and this has had a large cultural impact through the years. The government has supported socialist policies for decades. The outstanding health indicators of Costa Rica have been known for decades. [6][18] The estimated GDP for 2017 is US$61.5 billion, up significantly from the US$52.6 billion in 2015[18] while the estimated 2017 per capita (purchasing power parity) is US$12,382. agriculture 12.9%, industry 18.57%, services 69.02% (2016)[24], Unemployment rate: highest 10%: Companies in such zones must export at least 50% of their services. All other payments will be made only if funds are available. Even though bananas, pineapple, sugar, coffee, lumber, wood products and beef are still important exports, in recent times medical instruments,[26] electronics, pharmaceuticals, financial outsourcing, software development, and ecotourism are now the prime exports. The rest is drawn from tertiary industries – in other words, services. [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. [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. [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: The average wages in the FTZ increased by 7% and were 1.8 times greater than the average for private enterprise work in the rest of the country. Costa Rica applied to become a member of the OECD Anti-Bribery Convention, to be effective in July 2017.[86][87]. 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