Costa Rica

Republic of Costa RicaRepublica de Costa Rica

San José

Daniel M. Podgorski

General Information

• Terrain– Costal plains separated by

mountains– Mountain range includes

several major volcanoes• Climate

– Mild in central highland– Tropical and subtropical in

coastal plains• Area

– 51,500 sq. km– Includes Isla del Coco

• Population (est. 2007)– 4,133,884 inhabitants– Density: 80.3 per sq. km– Growth rate: 1.413%– Net migration rate: .48

migrants/1000 population• Government

– Democratic republic– President: Oscar Arias

Sanchez

People

• Life expectancy– 77.21 years– Male: 74.61 years– Female: 79.94 years

• Ethnic groups– European (including Mestizo)

94% (10-15% Nicaraguan of Mestizo origin)

– Black 3%– Indigenous 1% or less– Chinese 1%– Other 1%

• Religion– Roman Catholic 76.3%– Evangelical 13.7%– Jehovah’s Witnesses 1.3%– Other Protestant 0.7%– Other 4.8%– None 3.2%

Economic Information

• GDP (est. 2006)– PPP: 48.77 billion– Official exchange rate: $20.77

billion– Per capita (PPP): 12,000– Per capita (official exchange

rate): $5,100– Growth rate: 4.7%– Composition

• 8.6% agriculture• 31% industry• 60.4% services

• Inflation rate: 9.43%• Unemployment rate: 6.6%• Government budget

– Revenue: 3.134 billion– Expenditure: 3.475 billion– Balance: -.341 billion

• Outstanding public debt: 53.4% of GDP

• CA balance: -1.176 billion

Trade

• Exports– Commodities: bananas, pineapples, coffee, melons, ornamental plants,

sugar, textiles, electronic components, medical equipment, possibly electricity in the future

– Partners: 42.6% USA, 16.3% EU, 6.9% Hong Kong, 6.4%, 4.2% Guatemala

• Imports– Commodities: raw materials, consumer goods, capital equipment,

petroleum– Partners: 41.3% US, 13.1% EU, 5.6% Japan, 4.8% Venezuela, 4.8%

Mexico, 4.2% Brazil, 4.2% China

Free Trade Information

• Has sought to widen its economic and trade ties within and outside the Latin American region

• Signed free trade agreements with Canada, Chile, the Dominican Republic, Mexico, Trinidad, Tobago (negotiating with Panama)

• Looking to begin negotiating a regional Central American-EU free trade agreement in 2007

• Active participant in discussion of setting up the Free Trade Area of the Americas (along with 34 other countries)

• Free trade agreement with the Caribbean Community (CARICOM) was approved in 2005

• Dominican Republic - Central American Free Trade Agreement (DR-CAFTA)

Fiscal Policy

• Large internal and external deficits and large internal debt• Budget balances (% GDP):

– -3.1% 2003– -2.5% 2004– -1.6% 2005– -2.6% est. 2006– -2.6% projected 2007

• Comprehensive tax reform goals resulting in:– Sustained increases in social and capital expenditure– Improved reduction in debt

Monetary and ER Policy

• Currency: Costa Rican colon (CRC)• Exchange rates (colones per US dollar)

– 511.3 (2006), 477.79 (2005), 437.91 (2004), 398.66 (2003), 359.82 (2002)

– Central bank recently modified the exchange band

• Inflation– Fell below 10% in 2006– Exchange rate modification should help reduce inflation permanently– Reduction is challenging

• Rising import prices• Fiscal deficits

Social Policies

• Unemployment– 14.2% for those 12-24 and 4.3% for those 25-40– Reforms aimed to create jobs

• Education– Constitution provides for free and compulsory education– Literacy rates exceed 90%– Goal of dedicating 8% of GDP

• Social security– Costa Rica Social Security Fund– Voluntary retirement accounts (1996)– Private individual saving mandatory as of 2000

External Relations

• Long emphasized democracy and respect of human rights

• Permanent neutrality (1993)• Concern over Venezuela’s

democratic institutions• Nicaragua

– Helped end civil war during Arias first term in office

– Problems Nicaraguan immigration

– Heavy demands on social welfare system

– Rio San Juan

• US relations– Historically close and friendly– Supports international views– Most important trading partner– Private American citizens

• Issues with expropriation• Investment disputes

References• Bladex. (2006). Costa Rica. Retrieved May 20, 2007, from http://www.blx.com/paginasInfoLatam.aspx

?PAG_ID=26&CAT_ID=5• O Country Reports. (2004). Costa Rica. Retrieved May 17, 2007, from http://gpn.org/data/costarica.html• Energy Information Administration. (2006). Central America Regional Factsheet. Retrieved May 16, 2007,

from http://www.eia.doe.gov/emeu/cabs/Central_America/Background.html• External Relations. (2006). The EU’s Relations with Costa Rica. Retrieved May 21, 2007, from http://ec.

europa.eu/external_relations/costarica/intro/index.htm • Federal Reserve Bank of Atlanta. (2005). The Effect of the Privatization of Pension Plans on Financial and

Regulatory Systems in Latin America. Retrieved May 16, 2007, from http://www.frbatlanta.org/filelegacydocs/pensions_whitepaper05.pdf

• International Information Programs. (2006). Costa Rica’s Economy Strong, Says International Monetary Fund. Retrieved May 21, 2007 from http://usinfo.state.gov/xarchives/display.html?p=washfile-english&y=2006&m=August&x=200608041048221xeneerg4.751223e-02

• International Monetary Fund. (2007). IMF Staff Statement at the Conclusion of a Visit to Costa Rica. Retrieved May 20, 2007 from http://www.imf.org/external/np/sec/pr/2007/pr0727.htm

• South Florida Business Journal. (2003). U.S. works on CAFTA, without Costa Rica. Retrieved May 18, 2007, from http://southflorida.bizjournals.com/southflorida/stories/2003/12/15/daily44.html

• The World Bank. (2006). Costa Rica Country Brief. Retrieved May 16, 2007, from http://go.worldbank.org/KO0ABHBMH0

• The World Factbook. (2007). Costa Rica. Retrieved May 16, 2007, from http://www.cia.gov/library/publications/the-world-factbook/geos/cs.html

• U.S. Department of State. (2007). Background Note: Costa Rica. Retrieved May 16, 2007, from http://www.state.gov/r/pa/ei/bgn/2019.htm