flag Costa Rica Costa Rica: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Although Costa Rica had been seeing stable growth for the past few years and, although the pandemic negatively effected the country's GDP in 2020, the economy managed to return to its pre-pandemic level in 2021, when GDP grew by an estimated 3.9%. Growth was driven mainly by an increase in net exports of goods and services - mainly to the U.S. - as well as a significant recovery in the tourism sector, private investment, and consumption. According to the IMF, growth is expected to continue in the coming years, reaching 3.5% in 2022 and 3.1% in 2023.

Costa Rica's fiscal deficit has been constantly declining. In 2021, the country's fiscal deficit reached 6.2%, and that rate is expected to decrease to 5.4% in 2022 and 4% in 2023. Such reduction is attributed to the government’s focus on curtailing expenses, fighting tax evasion and improving efficiency. Public debt increased to an estimated 71.2% of GDP in 2021, and should continue to grow in the next couple of years, to 73.3% and 73.7% in 2022 and 2023, respectively. As bank resources remain partly allocated to financing public debt, private investment should remain constrained over that same period. In 2021, inflation increased to 1.3% and it is expected to continue increasing in the coming years, reaching 1.5% in 2022 ad 1.8% in 2023. The business environment will continue to be affected by infrastructure deficiencies (transport and telecommunications in particular) and relatively high energy costs. Moreover, Costa Rica still faces many challenges, such as unsustainable public accounts, susceptibility to natural disasters, a lack of skilled workforce, high income inequalities, and dependency on the United States (both economically and financially). However, Costa Rica is a global leader for its environmental policies and accomplishments. The pioneering Payments for Environmental Services (PES) program has been successful in promoting forest and biodiversity conservation, making Costa Rica the only tropical country in the world that has reversed deforestation. To mitigate the impact of COVID-19, the government continued implementing a series of fiscal measures in 2021, which included a temporary adjustment to social security contributions, a deferral of the roll-out of the VAT on construction and tourism services, a monthly subsidy to households that were economically affected by the crisis and met certain criteria, and an increase in public health spending. The Central Bank also reduced the cost of credit, relaxed regulations on restructuring of loans and on buybacks, and postponed interest payment for personal credit, mortgages, auto loans, credit card loans, consumer loans, and education loans for affected households and firms, among other measures. Overall, Costa Rica's fiscal response in light of the pandemic have been effective in boosting economic activity, which has been gradually recovering.

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, reaching the highest level in 30 years - 26.2%. Although the pandemic also had a negative impact on unemployment, the rate of unemployed people in Costa Rica decreased to 16.3% in 2021, and the IMF expects this rate to further decrease to 12% in 2022. Unemployment is the government’s main economic concern, and even though rates aren't particularly high, 46.3% of those who are employed work informally. Immigration from Nicaragua has increasingly become a concern for the government. It is estimated that between 300,000 and 500,000 of Nicaraguans are working in Costa Rica, legally and illegally. While being an important source of mostly unskilled labour, Nicaraguans also place a heavy demand on the social welfare system.

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 62.1464.4268.4972.9676.09
GDP (Constant Prices, Annual % Change) -4.17.83.82.93.0
GDP per Capita (USD) 1212131314
General Government Balance (in % of GDP) -6.7-5.5-4.8-3.9-3.1
General Government Gross Debt (in % of GDP) 67.268.267.666.566.0
Inflation Rate (%) 0.71.78.96.43.8
Current Account (billions USD) -0.64-2.14-3.30-3.20-2.79
Current Account (in % of GDP) -1.0-3.3-4.8-4.4-3.7

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) 12.0 18.8 69.2
Value Added (in % of GDP) 4.4 19.7 68.8
Value Added (Annual % Change) -0.9 -1.4 -5.3

Source: World Bank - Latest available data.

 
Socio-Demographic Indicators 2022 (e)2023 (e)2024 (e)
Unemployment Rate (%) 12.513.213.0

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 Economy, Industry and Commerce
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: October 2022