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Costa Rica: Future Trade Potential

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Costa Rica's economy slows down, but free trade pacts with the United States and China should help future growth.

BY JOACHIM BAMRUD

Costa Rica’s economy, the richest in Central America in per capita terms, will fall this year, but CAFTA and a future China FTA will help boost sectors ranging from finance to technology.

 

“In Costa Rica, there are factors like tourism, a market opening and the presence of foreign firms that have avoided the direct hit from the economic crisis,” says Ramon Garcia, General Manager for Central America for Canadian telecom giant Nortel. “There has been a tendency [though] to be more careful in making investments.”

 

Costa Rica’s GDP will decline by 1 percent this year, predicts Casey Reckman, associate director in Fitch Ratings sovereigns group. That compares with 2.9 percent growth last year. That would mark the first decline since 1982.

CAFTA BOOST?

The slowdown coincides with Costa Rica in January implementing a free trade agreement with the United States, Central America and the Dominican Republic known as DR-CAFTA or CAFTA after several years of delay.

 

“CAFTA will be good for Costa Rica,” says Anatol von Hahn, executive vice president for Latin America for Canada-based Scotiabank, which operates the leading private bank in the country. “The financial system is well positioned to accompany that growth.”

However, he emphasizes that the positive impact won’t be felt immediately. “Short term, the benefits may be limited, but long term, we...

 

 

Keywords: China, elections, inflation, JP Morgan, Nortel

 

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