Currently there are divided opinions about Costa Rica’s current economic strength. Looking at the situation positively there is a large source of highly educated workers available, located in a country that has invested heavily in its education, its housing and its health industry. On the negative side these huge investments have created big debts for the country to bear. It is currently debating major fiscal reform, as it has some of the biggest debts in Central and Southern America.
Prior to the global down turn in 2009 Costa Rica was enjoying stable economic growth. After a down turn in that year it has continued to grow, and between 2010 and 2015 it increased by 4% per year. The country now has a GDP growth of 3.7% and inflation is only 0.8%.
The country has always had strong exports of coffee, bananas, sugar and beef. Agriculturally it benefits from the rich soils of the Central Plateau and there is a rich history of trade with other countries that has left it in a strong position. In recent years other export areas have started to develop as well. In agriculture a greater diversity of products is now being sold overseas. Pineapples, rice and corn are proving popular as they are being supplied across the globe.
Costa Rica the world’s leading producer of pineapples
Where Costa Rica has changed most in its exports are the other products, aside from agricultural ones, that are now sent overseas. Medical instruments, electronics, pharmaceuticals, financial outsourcing, and software development are all exported and are making a difference to the trade balance. These light manufacturing companies are being created in the region as a result of the well trained and well-educated work force. The setting up of the free trade zones in the country has encouraged foreign companies to locate in the area and in 2015 the zones were responsible for 125, 000 jobs.
Intel taking advantage of the Free Trade Zones
The incentives, such as tax allowances have encouraged multi-national companies such as Amazon, Proctor and Gamble, and Intel to locate in Costa Rica and they are contributing a great deal towards exports as well as training the local work force. In recent years tourism has started to make a major contribution towards the economy. In 2016 2.6 million visitors contributed 3.42 billion US dollars to the economy, which was 5.1 % of the GDP and created 271,000 jobs.
With two major coastlines of magnificent beaches the country has always been a popular destination for tourists. However, where it is really starting to reap rewards is in the field of ecotourism. Costa Rico was a pioneer of ecotourism, and with its extensive national parks and protected areas, the country is one of only a few that can offer this type of tourism in a tropical rainforest environment. Costa Rica’s economy seems to be on the edge of making vast strides forwards. However, if it is able to do this will depend very much on the Government’s willingness to invest in its infrastructure. Currently it is suffering from a state of disrepair and a lack of investment with the road networks needing up grading.
This is also the case with the rail networks, the docks and water delivery systems. In a country where the majority of its energy sources come from hydro-electric plants there are many positive factors that will result in it supporting a successful economy. However, the priority of the Government must be to release or raise, the funds to improve the infrastructure that will enable Costa Rica to realize its potential.