Compared to its Central American neighbors, Costa Rica enjoys a high standard of living and a steady, yet reasonable, rate of inflation. The main drivers of the economy are tourism, agriculture and electronic exports.
A quarter of Costa Rica's land is dedicated to national forests, often near beautiful beaches, which has made the country a popular place for retirees and eco-tourists. The country's natural attractions and developed tourism services continue to attract foreign exchange and investment.
The country's fertile land and frequent rainfall make agriculture a major export, with pineapples recently overtaking coffee as the number two export behind bananas.
Foreign investors are attracted by the political stability and high education rates of Costa Rica, as well as the incentives offered in the country's free trade zones. In the past 10 years, the country has attracted some important foreign companies, such as Intel Corporation, Procter & Gamble, Hospira and Baxter Healthcare. These foreign interests employ thousands of Costa Ricans and provide much-needed diversity to the GDP.
Due to its extensive hydro-electric system, Costa Rica is largely self-sufficient in electricity, however, the country is completely reliant on imports for its liquid fuel needs and will be for some time. As recently as 2006, the Costa Rican government declined to explore oil deposits off its Atlantic coast for environmental reasons. But Costa Rica is positioned to become a major electricity exporter if plans for more hydroelectric generation and distribution come to fruition.
Costa Rica continues to expand its trade ties with countries both within and outside their region. The latest trade agreement, the CAFTA-DR, was approved by referendum in October 2007. Implementing this agreement, managing fiscal reform and tackling deficits and debt are a few of the challenges that face the Costa Rican government.
Costa Rica is also struggling with being ranked 117 out of 181 countries on the World Bank's Doing Business Index. This low ranking is preventing foreign investment and the subsequent resources needed to repair the country's aging infrastructure.
Economy Fast Facts
- GDP: $26.23 billion (2007)
- GDP PPP: $52.22 billion (2006 est.)
- Per Capita Income: $5,100 (PPP $11,862, 2006 est.)
- Inflation Rate: 10.81% (2007 est.)
- Real growth rate: 7.3% (2007 est.)
- Unemployment Rate: 4.6% (2007)
- Currency: Costa Rica Colon (CRC).
- Natural Resources: Hydroelectric power, forest products, fisheries products.
- Agriculture: Bananas, pineapples, coffee, beef, sugar, rice, dairy products, vegetables, fruits and ornamental plants (8.7% of GDP)
- Industry: Electronic components, food processing, textiles and apparel, construction materials, fertilizer, medical equipment (28.9% of GDP)
- Commerce, Tourism & Services: Hotels, restaurants, tourist services, banks, and insurance (62.4% of GDP)
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