Subchapters:
- Basic data
- Public finances and the state budget
- Banking system
- Tax System
Basic data
The Costa Rican economy fell by -5.1% last year. Unemployment rose to 20% at the end of 2020. The key sector of tourism was most severely affected, which led, among other things, to a drop in the inflow of foreign currency into the country. Growth of 3.4% is expected for 2021, however, assuming a positive development of the epidemiological situation in the country. It is expected that the return of tourists to the country will be very gradual, and the government is betting more on attracting foreign investment and supporting promising sectors of new technologies (healthcare, clean-tech, etc.) in which the country was already trying to profile before the pandemic. Check ebizdir for economical facts of Costa Rica.
Institutional reforms adopted in the second half of the 20th century and political stability led to a long period of rapid economic growth and led to significant improvements in human development indicators. Thanks to its economic success and standard of living, Costa Rica has long been billed as the “Switzerland of Central America” and, next to Panama, it has the highest GDP per capita in the region. Over the past two decades, the country has attracted investment in high-tech industries. Thanks to this, in addition to traditional agricultural exports, Costa Rica is also strong in the electronics, medical devices and IT sectors. In May 2021, Costa Rica became the newest member of the OECD.
| Pointer | 2018 | 2019 | 2020 | 2021 | 2022 |
| GDP growth (%) | 2.7 | 2.1 | -5.1 | 3.4 | 3.7 |
| GDP/population (USD/PPP) | 20,360.5 | 21,683.8 | 20,780.0 | 21,640.0 | 22,670.0 |
| Inflation (%) | 2.2 | 2.1 | 0.7 | 2.5 | 2.8 |
| Unemployment (%) | 10.3 | 11.8 | 19.6 | 16.2 | 13.9 |
| Export of goods (billion USD) | 11.5 | 11.6 | 11.8 | 11.9 | 12.5 |
| Import of goods (billion USD) | 15.9 | 15.4 | 14.0 | 15.3 | 16.7 |
| Trade Balance (Billion USD) | -4.4 | -3.7 | -2.2 | -3.3 | -4.2 |
| Industrial production (% change) | 3.5 | -1.2 | 1.0 | 3.0 | 3.5 |
| Population (millions) | 5.0 | 5.1 | 5.1 | 5.1 | 5.2 |
| Competitiveness | 55/140 | 62/141 | ON | ON | ON |
| OECD export risk | 3/7 | 4/7 | 4/7 | 4/7 | ON |
Source: EIU, OECD, WEF
Public finance and state budget
| Public finance | |
| State budget balance (% of GDP) | -8.0 |
| Public debt (% of GDP) | 89.0 |
| Current account balance (billion USD) | -1.3 |
| Taxes | |
| AFTER | 30% |
| F.O | 0%, 10%, 15%, 20%, 25% |
| VAT | basic rate 13% |
The economic slump caused by the pandemic revealed the unsustainable dynamics of public finances in the future. At the end of 2021, public debt could reach 89% of GDP. During 2021, the government will be forced to implement reforms that are a condition for receiving a loan from the IMF in the amount of USD billion. Taming the public debt and growing income inequality and social tension will be crucial for the further economic development of Costa Rica.
Costa Rica’s current account is permanently in deficit. In 2020, it was -1.47 billion USD. The paralysis of the tourism sector led to a decrease in the inflow of foreign currency into the country, which caused, among other things, a decrease in Costa Rica’s foreign exchange reserves to 7.2 billion USD.
Banking system
There are 2 types of banks in Costa Rica – state and private. The entire banking sector consists of 22 commercial banks (3 of which are state-owned and 19 private), 1 mortgage bank, 15 private financial companies and pension funds, 27 credit companies and savings cooperatives, and the central bank. The role of the central bank is performed by the Banco Central de Costa Rica. The regulator of the banking financial market in Costa Rica is SUGEF (the General Supervisory Agency of Finance).
The largest commercial banks include Banco Nacional, Banco de Costa Rica and Banco Credito Agricola de Cartago. Other large banks include Banco de San Jose, Banca Promerica, Banco Improsa and Banco Cathay. Of the foreign banks, HSBC and Citi have the largest share of the domestic market.
Tax system
The basic corporate tax rate in Costa Rica is 30%, however there are also bands of 5%, 10%, 15% and 20% for companies below certain income thresholds. Personal income tax does not apply to individuals with income up to CRC 3,742,000. Above this threshold there are 5 additional tax bands of 10%, 15%, 20% and 25%. The basic VAT rate is 13%.
In connection with the planned consolidation of public finances, which is a condition of the loan from the IMF, the government will be forced to adjust the tax system in order to collect more.
