Costa Rica - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.

Last published date: 2021-11-10

Costa Rica, the oldest continuous democracy in Latin America, celebrated the bicentennial of its independence in 2021.  In recent years Costa Rica has achieved moderate economic growth (2.1 percent in 2019), though the impact of the global COVID-19 pandemic has affected economic expansion, and the World Bank reported that GDP contracted by 4.5 percent in 2020.  A moderate rebound is projected in 2021.  The country’s relatively 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, such as electronics and medical devices, as well as continued development of the dynamic tourism sector. 

The current administration of Carlos Alvarado began its four-year term on May 8, 2018.  President Alvardo has continued robust government support for export promotion efforts and key initiatives begun under the Solis administration, including a successful effort to become a member of the Organization for Economic Cooperation and Development (OECD).  

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 the global COVID-19 pandemic.  Over the next several years, plans are in place for major upgrades involving rail, ports, airports, highways, and water systems.  The World Bank’s “Ease of Doing Business 2020” ranked Costa Rica 74 out of 190 countries world-wide.

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 2022.  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 is Costa Rica’s largest trade and investment partner.  Approximately half of all Foreign Direct Investment, and 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 investment in publicly traded companies, but companies are subject to local taxes.  While foreigners can own property with no title restrictions and the vast majority of land in Costa Rica has clear title, false or incomplete registries in the National Registry have prompted investor complaints.