Economy

/Economy
Economy 2017-01-11T13:52:46+00:00

Overview

Currency Colón (500 CRC = 1US$) / (670CRC = 1EUR)
Unemployment 6.5% (2011 est.)
Inflation rate Estimated at 4.8% in 2011
Tax exemptions for International large scale Investors e.g. Intel
Exportations Microprocessor 20%
 Prime industries Pharmaceuticals, financial outsourcing, Software development and ecotourism.
Three main cash crops export Bananas, pineapples and coffee
Most visited nation in Central America 2.2 million foreign visitors in 2011
International tourist receipts US$2.4 billion in 2012
Electricity produntion 94% renewable sources (mainly hydropower)

After having a positive growth over the previous several years, the Costa Rican economy shrank slightly in 2009 (-2.5%) due to the global economic crisis. The services sector was the most affected, with tourism falling by 8%. Services account for nearly 70% of GDP. The economy experienced a rebound in 2010, with a 4.2% and 4.0% GDP growth rate in 2010 and 2011 respectively.

Costa Rica has the region’s highest standard of life quality and economical sustainability. The unemployment rate is 6.5%. Inflation rate is about 4 to 5%.

Costa Rica’s major economic resources are tourism, agriculture and exportations. Also its very well educated population, and the strategic location in the Central American isthmus, which provides access to North and South American markets and ocean access to the European and Asia.

Conservation efforts have protected more than 26% of its land under, thus safeguarding more than 5% of the entire world’s biodiversity. The country’s top economic priorities include passing fiscal reform, pursuing responsible monetary policy, and creating opportunities for inclusive economic growth. Significant legislative hurdles slow down passage of new laws and present challenges for the country’s economic policymakers.

Costa Rica’s insurance, telecommunications, electricity distribution, petroleum distribution, potable water, sewage, and railroad transportation industries have been state monopolies. However, under the U.S.-Central American-Dominican Republic Free Trade Agreement (CAFTA-DR), Costa Rica accords substantial market access in a wide range of services, subject to very few exceptions. The wireless telephony, data telecommunications, and insurance markets opened to market competition in 2010. As part of the implementing agenda for CAFTA-DR, Costa Rica intends to strengthen and modernize the state monopoly telecommunications provider (ICE) so that it can remain

competitive with new companies entering the market.

Manufacturing and industry’s contribution to GDP overtook agriculture in the 1990s, led by foreign investment in Costa Rica’s free trade zone. Well over half of that investment has come from the United States. Del Monte, Dole, and Chiquita have a large presence in the banana and pineapple industries. In recent years, Costa Rica has successfully attracted important investments by such companies as Intel Corporation, which employs 3,200 people at its $1.996 billion microprocessor plant; Procter and Gamble, which employs about 1,200 people in its administrative center for the Western Hemisphere; and Boston Scientific, Allergan, Hospira, and Baxter Healthcare from the healthcare products industry. Two-way trade between the U.S. and Costa Rica exceeded $16.2 billion in 2011. Costa Rica was the United States’ 40th-largest goods export market in 2010.

Costa Rica has sought to widen its economic and trade ties within and outside the region. The country signed a bilateral trade agreement with Mexico in 1994, which was later amended to cover a wider range of products. Costa Rica also has signed trade agreements with Canada, Chile, the Dominican Republic, Panama, and several Caribbean Community countries. In March 1998, it joined other Central American countries and the Dominican Republic in establishing a Trade and Investment Council with the United States. Following a 2007 public referendum, Costa Rica ratified CAFTA-DR, which entered into force in January 2009.

In October 2007, Costa Rica began negotiating a regional Central American-European Union (EU) trade agreement. Together with El Salvador, Guatemala, Honduras, Nicaragua, and Panama, its free trade agreement with the EU came into force in January 2011. In April 2010 Costa Rica signed free trade agreements with China and Singapore. The agreement with China was ratified in 2010 and entered into force in 2011. The agreement with Singapore still requires the Costa Rican legislature’s approval. Additionally, Costa Rica is interested in joining the Asia-Pacific Economic Cooperation (APEC) forum and the Organization of the Petroleum Exporting Countries (OPEC).

 

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