flag Costa Rica Costa Rica: Economic Outline

Economic Indicators

Costa Rica is classified as an upper middle-income country, having demonstrated consistent economic growth over the last 25 years. This growth has been driven by an outward-focused approach, emphasizing openness to foreign investment and progressive trade liberalization. Following a moderation to 4.6% in 2022, growth exceeded expectations, reaching 5.1% in 2023, driven by strong domestic and external demand. Inflationary pressures eased in the first half of 2023. However, amid global uncertainties and a slowdown in key trading partners, the growth projection for 2024 is 3.9%, with further moderation expected to 3.7% in both 2025 and 2026 (World Bank).

The budget deficit had decreased over the preceding two years, aligning with the IMF-agreed program. However, it rose in 2023 due to heightened debt servicing (5.1% of GDP - Coface). It is expected to revert to its previous trend in 2024 as the government pursues fiscal consolidation. The enactment of the public employment reform passed in 2022 will facilitate reduced public spending, saving an average of 1% of GDP annually over the initial five years of implementation. Despite this, the primary surplus, excluding interest, is anticipated to surpass the IMF-defined target (1.3% of GDP) in both 2023 and 2024. Public debt, with 28% external and 38% denominated in USD, will continue on a downward trajectory. The IMF estimated it at around 63% in 2023, with a reduction to nearly 61% by 2025. According to the latest governmental figures, the general inflation recorded a cumulative variation (from January to December 2023) of -1.77%. The IMF expects inflation to gradually pick up to 1.9% this year and 3% in 2025. Costa Rica's susceptibility to external shocks, including global inflationary pressures and tightening financial conditions, presents challenges. Climate vulnerabilities, exacerbated by phenomena like El Niño, compound these uncertainties and may disproportionately affect the impoverished. Moreover, recent increases in migration and perceived criminality could elevate expenditure demands, potentially hindering fiscal consolidation efforts. Costa Rica still faces many challenges, such as unsustainable public accounts, a lack of a skilled workforce, high income inequalities, and dependency on the United States (both economically and financially). However, the country is a global leader for its environmental policies and accomplishments.

Thanks to the establishment of a welfare state 60 years ago, the country has managed to greatly reduce poverty and has some of the best social indicators in its region. Although the poverty rate is low, it increased due to the COVID-19 pandemic. Poverty rates remain notably elevated among vulnerable demographics including Afro-descendants, Indigenous populations, and migrants. The onset of the global pandemic exacerbated these disparities, with the poverty rate (2017 PPP) escalating from 13.7% in 2019 to 19.9% in 2020. However, by 2023, as labor market conditions ameliorated and real household per-capita labor income rebounded, poverty subsided to 12.7% below pre-pandemic levels. Unemployment is the government’s main economic concern, and even though rates aren't particularly high (8.5% in 2023 as per the World Bank), almost half of those who are employed work informally.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 68.3785.5991.9397.24102.62
GDP (Constant Prices, Annual % Change) 4.34.43.23.23.2
GDP per Capita (USD) 13,07516,21317,24918,07518,895
General Government Balance (in % of GDP) -4.2-3.7-3.1-2.6-2.4
General Government Gross Debt (in % of GDP) 63.863.061.860.959.9
Inflation Rate (%) n/a0.71.93.03.0
Current Account (billions USD) -2.56-2.38-2.10-1.93-1.86
Current Account (in % of GDP) -3.7-2.8-2.3-2.0-1.8

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
Costa Rican Colon (CRC) - Average Annual Exchange Rate For 1 GHS 136.53130.44125.83112.94104.53

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 17.1 17.2 65.7
Value Added (in % of GDP) 4.0 20.8 67.0
Value Added (Annual % Change) -4.1 1.3 5.6

Source: World Bank - Latest available data.

 
Socio-Demographic Indicators 2024 (e)2025 (e)2026 (e)
Unemployment Rate (%) 9.89.79.6

Source: IMF – World Economic Outlook Database - Latest available data

 

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The Active Population in Figures

201820192020
Labour Force 2,445,7412,568,2292,444,872

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 66.37%68.61%71.15%
Men activity rate 81.31%82.95%83.94%
Women activity rate 51.36%54.21%58.30%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
64,2/100
World Rank:
72
Regional Rank:
14

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.36/10
World Rank:
47/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
5/180

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Sources of General Economic Information

Main Online Newspapers and Portals
The Tico Times
Diario Extra
La Nación
El País
The Costa Rica News
The Costa Rica Star
Einnews, Costa Rica news
Costarica.com
Infocostarica
CentralAmerica.com, Costa Rica
Useful Resources
Ministry of Finance
Ministry of Foreign Affairs
Ministry of Foreign Trade
Ministry of Environment and Energy
Ministry of National Planning and Economic Policy
Ministry of the Presidency
Central Bank of Costa Rica
 
 

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Latest Update: May 2024