Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Costa Rica, the oldest continuous democracy in Latin America, conducted presidential and legislative elections in February 2022. In an April presidential run-off, President Rodrigo Chaves, was elected with 53 percent of the vote. President Chaves, a former Finance Minister and World Bank official, seeks to continue to grow the Costa Rican economy as the Administration pursues new free trade agreements with regional and global allies, and by continuing the country’s strong track record of attracting high-tech investments from multinational companies. The country’s well-educated labor force, focus on English-language instruction, relatively low levels of corruption, geographic proximity to the United States, and attractive free trade zone incentives offer strong appeal to many exporters and investors. In recent decades, the Costa Rican government has focused on attracting investment from high-tech manufacturers in the semiconductor, electronics and medical device sectors. In 2021, Costa Rica recorded 7.6 percent GDP growth, the highest increase since 2008, and has a more modest outlook of 4.3 percent for 2022, as the import-dependent economy experiences the effects of high oil and fuel prices.
Current domestic issues include Costa Rica’s persistent fiscal deficit, stifling internal bureaucracy, the high cost of energy, the state of basic infrastructure, and the impact of inflationary issues throughout the globe. Over the next several years, plans are in place for major upgrades involving rail, ports, airports, highways, and water systems.
Costa Rica ratified the U.S.-Central American Free Trade Agreement (CAFTA-DR) in 2009. This free trade agreement eliminated most of the tariffs for non-agricultural imports and has made trade and investment in the region more attractive to U.S. companies. The remaining tariffs on virtually all U.S. agricultural products will be eliminated by 2023. CAFTA-DR member countries have further promised increased transparency in customs dealings, anti-corruption measures in government contracting and procurement, and strong legal protections for U.S. investors.
The United States and Costa Rica continue to enjoy a strong and mutually beneficial economic relationship, headlined by the United States’ support for Costa Rica’s successful effort to join the Organization for Economic Cooperation and Development (OECD) in 2021. In addition, the U.S. is Costa Rica’s largest trade and investment partner. Approximately 79 percent of Costa Rica’s Foreign Direct Investment in 2021 came from the United States ($2.5 billion), and Costa Rica is home to more than 250 U.S. companies who employ over 126,000 employees. In addition, almost 40 percent of all imports are of U.S. origin. There are no restrictions on capital flows in or out of Costa Rica nor on portfolio investments in publicly traded companies, but companies are subject to local taxes. While foreigners can own property with no title restrictions, and most of the land in Costa Rica has clear title, false or incomplete registries in the National Registry have prompted investor complaints.