Costa Rica is going through a difficult fiscal situation, with a deficit that remains around 6% of gross domestic product (GDP), and economists continue to advise improving the collection of taxes and reducing government spending.
Between November of 2016 and November of 2017, Costa Rica’s overall cost of living in increased by 2.49%, according to the Consumer Price Index (CPI), published by the National Institute of Statistics and Census (INEC).
The price of fuel is the sector that has most affected the pockets of Costa Rica’s residents during the last 12 months. Costa Rica has a state-owned petroleum distribution company named RECOPE, and during 2017, fuel costs had an increase of 8.5%, which caused the costs for electricity, telephone, water and public transport to increase by 5.9%.
Of the 315 goods and services that the average consumer purchases, 48% increased in price during this period and 40% of them decreased, and 12% of the products did not realize any variation.
The Gross Domestic Product (GDP) grew from 2% to more than 4% during 2017. This is a notable performance, given that the rest of Latin America fell from 3% to negative levels.
Poverty fell from 22.4% of households in 2014 to 20% in 2017, and extreme poverty from 6.7% to 5.7%. The reduction of rural poverty was also significant, from 30.3% in 2014 to 24.1% in 2017.
Unemployment was contained after the rate rose from 8.6% in 2010 to 10.9% in 2011, the highest level in the history of the country. In 2014, it remained between 9% and 10%, in 2015 it rose to 10%, and in 2016 it was between 9.4% and 9.7%. During 2017, unemployment was recorded between 8.5% and 9.4%, and this was the lowest in history.
Costa Rica’s economy was positioned at 61 out of 190 economies in the Doing Business Report, published by the World Bank, to assess the facilities and/or difficulties of countries to conduct business.
During 2017, Costa Rica improved its rating, positioned at 47 out of 137 countries in the 2017-2018 Global Competitiveness Index, published by the World Economic Forum (WEF).
Tourism in Costa Rica is an important economic engine, and it grew almost three times the pace of the rest of the economy. During 2017, tourism continued to grow with the arrival of eight new airlines, increasing the number of seats available for tourists to almost half a million.
For the period from 2015 to 2017, Costa Rica ranked second in terms of growth in the value of its exports in the region, with 16.8% increase, according to the data of the Economic Commission for Latin America (ECLAC). The largest increase was in the precision medical equipment sector that grew by 46% and represents 26% of the total exports of goods. The business services sector grew at a rate of 76%, while the export overall of goods increased 31% during the last three years.
As is evident, Costa Rica’s economy continues to move forward, and overcome the challenges of its bulging bureaucracy and rising costs of living and conducting business.
The writer, Tom Rosenberger has lived and worked in Costa Rica for 25 years and he has acquired a wealth of knowledge about living and doing business in Costa Rica. If you have questions and would like to contact Tom click here.