Costa Rica’s economy has enjoyed solid growth since it recovered from the global economic crisis. Even before its contraction in 2009, Costa Rica has maintained an average economic growth of about 3.58% up until 2016. Forecasts claim the economy of Costa Rica will keep a strong pace, with household consumption and growing exports for 2017.
What is Costa Rica’s Economy Made Of?
In recent years, the economy backs itself primarily by services, accounting for 63% of GDP. Those services are segmented as following: communications, transport, and warehousing with 16%. Hotels, restaurants, and trade with 15%, and personal, social, and community services representing 9%. Quarry, mining, and manufacturing account for 21% of the wealth.
Agriculture, forestry, livestock, and fishing have taken a secondary role in GDP, but are still one of the bases of the export trade.
Goods and services of high value further strengthen exports. These include medical services like surgery, dentistry, and also tourism.
With a land as rich in biodiversity, Costa Rica is bolstered as a top ecotourism destination. Costa Rica is the most visited nation in the Central American region. For 2016, the projected number of visitors estimates around 2.9 million visitors. That’s the triple of visitors the country saw in 1999.
The government has made some efforts to attract foreign investors. They are mainly attracted by the relatively high educational levels, political stability, and many incentives like the free-trade zones. Thus, Costa Rica has amassed one of the highest levels of foreign direct investment in Latin America.
Challenges of The Costa Rican Economy
Still, Costa Rica’s economy has a long way to go. Fiscal policies are old and ineffective.
The fiscal performance has actually improved in recent years due to better tax collection and spending control. Even so, the OECD (Organisation for Economic Co-operation and Development) stated that a fiscal reform in Costa Rica is urgent. Social inequality is stark in Costa Rica, and unemployment rose to almost 10% in 2016’s third quarter.
Even with great numbers for projected growth, the country needs to promote innovation for infrastructure (One of Costa Rica’s weak points), access to finance, and competition. They will need this consequently in order to decrease inequality, unemployment, and share prosperity more equitably.
Education, while high in average against the region, still aims at fulfilling corporate and public jobs. This worsens the slow innovation and local entrepreneurship problem. As a result, it creates a culture of conservative mindsets, which prefer the stability of paid jobs.
Opportunities In The Current Costa Rican Economy
Economy in Costa Rica has still plenty of opportunity for the entrepreneur that is forward thinking and a risk taker. International trade agreements have created job growth in industrial, telecommunications, and manufacturing sectors. These are attracting eCommerce and services startups that cater to a growing middle class.
While financing and legal processes are still a liability, the region experiments exponential growth, and experts expect continued growth throughout the decade.
Internet use has a projected growth of almost 50% in the coming half decade. Online national and international transactions are growing, and need platforms to support themselves.
There’s opportunity to supply innovation in products, HR management, and business outsourcing. Access to new technologies, software development, and marketing services will see higher demand.
Investing in real estate could have positive opportunities at full spectrum: condo projects, residential, agriculture, etc. This rings true, as new projects to expand and renovate access areas and roads are already underway in the country.
Costa Rica’s Economy Statistics
GDP (purchasing power parity) (2016): US$79.26 billion
GDP per capita (2014): US$16,100
Real annual growth rate (2016): 4.3%
Inflation (2016): 0.3%
Unemployment (2016): 9.3%
Agriculture: bananas, pineapples, coffee, melons, ornamental plants, sugar, corn, rice, beans, potatoes; beef, poultry, dairy; timber
Labor force: 2.295 million
Labor force by occupation (2006 est.): agriculture: 14%, industry: 22%, services: 64%
Industries: medical equipment, food processing, textiles and clothing, construction materials, fertilizer, plastic products
Exports (2016): $9.824 billion
Export – commodities: bananas, pineapples, coffee, melons, ornamental plants, sugar; beef; seafood; electronic components, medical equipment
Imports (2016): $14.76 billion
Import – commodities: raw materials, consumer goods, capital equipment, petroleum, construction materials
Top Export Partners (2015): US 33.6%, China 6.2%, Mexico 4.6%, Nicaragua 4.3%, Netherlands 4.2%, Guatemala 4% (2015)
Top Import Partners: US 45.3%, China 9.8%, Mexico 7.1%