Costa Rica

Economic Overview of Costa Rica

GDP and Economic Growth
• GDP (2024 estimate): $75 billion USD.
• Growth Rate: Costa Rica is projected to grow by 3.5%-4.0% in 2024, driven by its robust services sector, sustainable tourism, and expanding high-tech manufacturing industry.
• Key Strengths: A stable democracy, commitment to environmental sustainability, and a well-educated workforce make Costa Rica an attractive destination for business and investment.

Key Economic Features
• Sustainability Leader: Costa Rica is a pioneer in renewable energy, producing over 99% of its electricity from renewable sources.
• High Human Development Index (HDI): The country ranks high in education, healthcare, and social welfare, supporting a productive workforce.
• Open Economy: Costa Rica maintains free trade agreements (FTAs) with key global partners, including the UK under the UK-Central America Association Agreement.

Key Sectors of the Costa Rican Economy
1. Technology and Services
• Costa Rica has become a hub for IT outsourcing, shared services, and software development.
• The government promotes foreign investment in knowledge-based industries through incentives in Free Trade Zones (FTZs).
2. Agriculture
• Known for its exports of coffee, bananas, pineapples, and tropical fruits, Costa Rica is a significant supplier to the UK and European markets.
• There is growing demand for organic and fair-trade products.
3. Tourism
• Costa Rica’s eco-tourism sector is a global leader, drawing visitors with its national parks, rainforests, and pristine beaches.
• High-end and sustainable tourism are expanding niches.
4. Medical Devices and Pharmaceuticals
• Costa Rica is the second-largest exporter of medical devices in Latin America, benefiting from advanced manufacturing capabilities and skilled labor.
5. Renewable Energy
• A global leader in renewable energy, Costa Rica seeks foreign expertise in expanding solar, wind, and bioenergy capacity.

Trade Environment

Main Export Partners
• United States, European Union, China, and Mexico.

Main Import Partners
• United States, China, Mexico, and European Union.

Trade Policies
• Costa Rica is a member of the World Trade Organization (WTO) and the Central American Integration System (SICA).
• The UK-Central America Association Agreement ensures tariff-free trade for most goods between Costa Rica and the UK, fostering closer economic ties.

Opportunities for UK Exporters to Costa Rica
1. Sustainable Products and Technology
• Costa Rica’s commitment to sustainability opens opportunities for UK firms specializing in renewable energy, electric vehicles, and sustainable building materials.
2. Agricultural Technology
• Advanced farming techniques, irrigation systems, and pest control solutions are in demand to enhance productivity and meet export standards.
3. Education and Training
• English language education, vocational training, and partnerships with UK universities are growing areas of interest.
4. Healthcare and Medical Devices
• Opportunities exist for UK exporters of medical equipment, pharmaceuticals, and biotechnology, particularly to support Costa Rica’s expanding healthcare system.
5. Tourism Services and Infrastructure
• UK firms can explore partnerships in luxury and eco-tourism projects, as well as infrastructure development for the growing tourism sector.

UK-Costa Rica Trade Relations
1. Trade Agreement
• The UK-Central America Association Agreement facilitates trade and investment, offering tariff-free access to many goods and services.
2. UK Exports to Costa Rica (2023)
• Machinery and mechanical appliances: £100 million.
• Pharmaceuticals: £30 million.
• Vehicles: £20 million.
• Alcoholic beverages: £10 million.
3. Investment Climate
• The UK is a growing investor in Costa Rica’s high-tech manufacturing, renewable energy, and education sectors.
• Costa Rica’s Free Trade Zones (FTZs) offer tax incentives to foreign investors.

Market Entry Considerations

Challenges to Entry
1. Bureaucracy: Navigating regulatory processes can be time-consuming.
2. Small Market Size: Costa Rica’s population of 5 million limits market size, requiring exporters to consider regional strategies.
3. Cultural Barriers: Spanish proficiency and an understanding of local business culture are crucial for success.

Recommendations for UK Exporters
• Work with local partners and distributors to navigate the market effectively.
• Utilize support from the British Chamber of Commerce in Costa Rica and UK Department for Business and Trade (DBT) for market insights.
• Leverage Costa Rica’s Free Trade Zones for manufacturing and export opportunities.

Recent Political Developments

Costa Rica remains politically stable, with a commitment to democracy and sustainable development.
1. Green Policies:
• The government continues to prioritize renewable energy, biodiversity protection, and carbon neutrality by 2050, aligning with global climate goals.
2. Economic Policies:
• Recent reforms focus on improving public finances and reducing bureaucracy to attract more foreign investment.
3. Social Challenges:
• Rising inequality and unemployment are pressing concerns, prompting government initiatives to boost education and job creation.

Contact Information

British Embassy in San José
• Address: Edificio Centro Colón, Piso 11, Paseo Colón, San José, Costa Rica.
• Phone: +506 2258 2025.
• Email: info.sanjose@fcdo.gov.uk.

British Chamber of Commerce in Costa Rica
• Address: Barrio Dent, San José, Costa Rica.
• Phone: +506 2224 4567.
• Email: info@britcham.cr.

Costa Rican Investment Promotion Agency (CINDE)
• Address: 2nd Avenue, San José, Costa Rica.
• Phone: +506 2201 2800.
• Email: info@cinde.org.

Conclusion

Costa Rica presents compelling opportunities for UK exporters and investors, particularly in sectors like renewable energy, technology, and sustainable tourism. Its stable political environment, sustainability leadership, and skilled workforce make it a gateway to Central America.

By leveraging trade agreements, forming local partnerships, and aligning with Costa Rica’s green and digital strategies, UK businesses can tap into this vibrant and growing market.