COSTA RICA – October 1st, 2012 – The Ministry of Finance recently confirmed that Costa Rica’s economy is slowing, and some business people and economists blame the slowdowns in Costa Rica’s prime export markets.
The Costa Rican economy depends highly on international commerce. 36.7% of the country’s total exports go to the United States, followed by Central America at 19.3%, and Europe, which buys up 17.7% of Costa Rica’s total exports.
This year, however, several of Costa Rica’s prime export markets’ economies have further slowed. The United States economy is expected to show growth of just 1.7%, whereas the European market is expected to have contracted by 0.6% by the end of the year.
This means that 54.4% of Costa Rica’s exports are traditionally destined for markets that are expecting slow, no, or negative growth. The outlook becomes even darker when one considers the additional slowdown in the Chinese market.
One of Costa Rica’s export destinations, however, continues to show consistent 4% growth – Central America.
And while 2013 is forecast to be slightly better for the US and European economies, their growth will hardly be enough to keep up with Costa Rica’s export ambitions. According to the International Monetary Fund, the United States market is expected to grow only 2.3% in 2013, while the European market is expected to have a small growth of 1%. Central America, though, is expected to have its continued growth of 4%.
So, what should Costa Rica do in order to continue growing, given the outlook in its biggest export markets? Many businessmen believe Costa Ricans should take a closer look at their neighbors in Central America and other Latin American markets.
Costa Rica has signed several important commercial agreements with countries such as Mexico and Chile. Exports to Mexico have had an annual growth of 10.7%, and the exports to Chile have been slowly growing since 2006.
If Costa Rica’s exporters take advantage of these emerging markets, as well as Central America, it is hoped that Costa Rica can continue to be Central America’s largest exporter.