Costa Rica - Economy

Economy - overview:
According to the CIA World Factbook, Costa Rica's GDP per capita is US$13,500 PPP (2007 estimate); however, this developing country still faces the fourth highest inflation rate in Latin America, lack of maintenance and new investment in infrastructure, over 16% of the people were below the poverty line (2006 estimate) and a 5.5% unemployment rate (2007 estimate). The Costa Rican economy grew nearly 5% in 2006 after experiencing four years of slow economic growth. Costa Rica is also the Latin American pioneer in the implementation of a modern welfare state. Its welfare spending is as high as that of Scandinavian countries.

The central government offers tax exemptions for those who are willing to invest in the country. Several global high tech corporations have already started developing in the area exporting goods including chip manufacturer Intel, pharmaceutical company GlaxoSmithKline, and consumer products company Procter & Gamble. In 2006 Intel's microprocessor facility alone was responsible for 20% of Costa Rican exports and 4.9% of the country's GDP. Trade with South East Asia and Russia has boomed during 2004 and 2005, and the country is expected to obtain full Asia-Pacific Economic Cooperation Forum (APEC) membership by 2007 (the country became an observer in 2004).

For the fiscal year 2005, the country showed a government deficit of 2.1%, internal revenue increased an 18%, and exports increased a 12.8%. Revised economic figures released by the Central Bank indicate that economic growth stood at 5%, nevertheless the country faced high inflation (14%) and a trade deficit of 5.2%. As of 2007, Costa Rica's inflation rate stands at 9.30%, Latin Americas 4th highest inflation rate.

In recent times electronics, pharmaceuticals, financial outsourcing, software development, and ecotourism have become the prime industries in Costa Rica's economy. High levels of education among its residents make the country an attractive investing location. Since 1999, tourism earns more foreign exchange than the combined exports of the country's three main cash crops: bananas, pineapples and coffee. Coffee production has played a key role in Costa Rica's history and economy, and by 2006 was the third cash crop export. The largest coffee growing areas are in the provinces of San José, Alajuela, Heredia, Puntarenas, and Cartago. Costa Rica is famous for its gourmet coffee beans, with Costa Rican Tarrazú among the finest Arabica coffee beans in the world used for making espresso coffee, together with Jamaican Blue Mountain, Guatemalan Antigua and Ethiopian Sidamo.

The unit of currency is the colón (CRC), which trades around 548 to the U.S. dollar; currently about 800 to the euro. On October 16, 2006, a new currency exchange system was introduced, allowing the value of the CRC colón to float between two bands as done previously by Chile. The idea is that by doing so the Central Bank will be able to better tackle inflation and discourage the use of US dollars. Since that time, the value of the colón against the dollar has stabilized.

Costa Rica's location provides easy access to American markets as it has the same time zone as the central part of the United States and direct ocean access to Europe and Asia. A country wide referendum has approved a free trade agreement with the United States. In the referendum on October 7, 2007, the voters of Costa Rica narrowly backed the free trade agreement, with 51.6 percent of "Yes" votes.

GDP (purchasing power parity):
$45.77 billion (2007 est.)
GDP (official exchange rate):
$26.24 billion (2007 est.)
GDP - real growth rate:
6.8% (2007 est.)
GDP - per capita (PPP):
$11,100 (2007 est.)
GDP - composition by sector:
agriculture: 8.6%
industry: 29.4%
services: 62.1% (2007 est.)
Labor force:
1.92 million
note: this official estimate excludes Nicaraguans living in Costa Rica (2007 est.)
Labor force - by occupation:
agriculture: 14%
industry: 22%
services: 64% (2006 est.)
Unemployment rate:
4.6% (2007 est.)
Inflation rate (consumer prices):
9.4% (2007 est.)
Investment (gross fixed):
21.6% of GDP (2007 est.)
Budget:
revenues: $3.976 billion
expenditures: $3.808 billion (2007 est.)
Public debt:
46.6% of GDP (2007 est.)
Agriculture - products:
bananas, pineapples, coffee, melons, ornamental plants, sugar, corn, rice, beans, potatoes; beef; timber
Industries:
microprocessors, food processing, medical equipment, textiles and clothing, construction materials, fertilizer, plastic products
Industrial production growth rate:
7.3% (2007 est.)
Electricity - production:
8.349 billion kWh (2005)
Electricity - consumption:
7.776 billion kWh (2005)
Electricity - exports:
70 million kWh (2005)
Electricity - imports:
81 million kWh (2005)
Oil - consumption:
43,000 bbl/day (2005 est.)
Oil - exports:
2,998 bbl/day (2004)
Oil - imports:
43,640 bbl/day (2004)
Current account balance:
-$1.499 billion (2007 est.)
Exports:
$9.268 billion (2007 est.)
Exports - commodities:
bananas, pineapples, coffee, melons, ornamental plants, sugar; seafood; electronic components, medical equipment
Exports - partners:
US 24.9%, China 13.7%, Netherlands 10.6%, Mexico 6.4%, UK 6.1% (2007)
Imports:
$12.26 billion (2007 est.)
Imports - commodities:
raw materials, consumer goods, capital equipment, petroleum, construction materials
Imports - partners:
US 40.2%, Mexico 5.7%, Venezuela 5.6%, Japan 5.3%, China 5%, Brazil 4.7% (2007)
Economic aid - recipient:
$29.51 million (2005)
Reserves of foreign exchange and gold:
$4.114 billion (31 December 2007 est.)
Debt - external:
$7.416 billion (30 June 2007)
Currency (code):
Costa Rican colon (CRC)
Exchange rates:
Costa Rican colones per US dollar - 519.53 (2007), 511.3 (2006), 477.79 (2005), 437.91 (2004), 398.66 (2003)
Fiscal year:
calendar year