The Economy of Costa Rica
Historically, the Costa Rican economy has been predominantly agriculture, such as coffee production, pineapples, bananas, ornamental flowers and palm oil. In recent years ecotourism, pharmaceuticals, electronics, finance and the software industry have moved in. The location of Costa Rica on the Central American Isthmus gives easy access to US, European and Asian markets. It switches time zones, half a year central (CST) and half a year mountain (MST).
The Costa Rican economy has been growing in part because their government implemented a seven-year-plan to expand into the high tech sector with tax exemptions and easy residency to investors. Comparatively high education levels make the Costa Rican population attractive for investors. High tech global corporations have moved in already like Intel (computer chips), pharmaceutical leader Glaxo Smith Kline and consumer general products limited Proctor and Gamble. Trading with S.E. Asia and Russia started booming during 2004 and 2005, and China now receives a full 18% of Costa Rican exports, and bound to grow in 2007, Costa Rica also qualified for full Asia-Pacific Economic Cooperation Forum (A.P.E.C.) membership.
For the fiscal year 2007 the country showed a government deficit of 2.1%, internal revenue increased an 18%, exports increased a 12.8% and the number of visiting tourists increased a whopping 19%, reaching 1.96 million people. Revised economic figures released by the Central Bank indicate that economic growth stood at 7.2%, nevertheless the country has started facing inflation at around 14% and a trade deficit of 5.2%. For 2008 the economy was expected to grow a 6.8%, but these figures may be downsized with the recent American mortgage meltdown.
The unit of currency is the colón (CRC), which trades around 525 to the U.S. dollar; currently about 645 to the Euro. In 2007 a new currency exchange system started to allow the value of the CRC colón to float on a daily basis between two bands as done previously by Chile. The idea is that by doing so the Central Bank will be able to better tackle inflation and discourage the use of US dollars. Oscar Arias seems to have some well thought out ideas.