Costa Rica is a development success story in many respects. Considered an upper middle-income country, Costa Rica has experienced steady economic expansion over the past 25 years. The post-1980s economic growth is the product of a strategy of outward-oriented growth, based on openness to foreign investment and gradual trade liberalization.
Costa Rica is also a global leader for its environmental policies and accomplishments, which have helped the country build its Green Trademark. The pioneering Payments for Environmental Services (PES) program has been successful in promoting forest and biodiversity conservation; making Costa Rica the only tropical country in the world that has reversed deforestation.
The combination of political stability, a social compact, and steady growth has resulted in one of the lowest poverty rates in Latin America and the Caribbean.
According to data from the National Household Survey of the National Institute of Statistics and Census, the country managed to reduce total poverty from 22.3 to 20.5 percent between 2014 and 2016. In the case of rural poverty, there was a decrease from 30.3 to 25.7 percent for the same period; and urban poverty, in those same years, fell from 19.5 to 18.6 percent. Meanwhile, by 2016, 6.3 percent of the country's households are living in extreme poverty.
The country’s success over the past decades is also reflected in its strong human development indicators, which continue to rank higher than those of other countries in the region.
Costa Rica’s GDP per capita has tripled since 1960 and its growth averaged 4.5 percent between 2000 and 2013, compared to the regional average of 3.8 percent for the same period.
During the global crisis, real GDP growth slowed to 2.7 percent in 2008 and contracted to 1 percent in 2009. The economy rebounded following the crisis, achieving an average real growth rate of 4.9 percent between 2010 and 2012. Growth decelerated to 3.5 percent in 2013, and there was a pick up to 3.7 and 4.3 percent in 2015 and 2016, respectively. This year, a slight drop to 3.9 percent is expected, and the prospect for 2018 is of 3.7 percent.
Despite the solid growth over the past decades, two pressing development challenges stand out: the deteriorating fiscal situation and stubborn inequality. These affect the basic pillars of development: inclusion, growth, and sustainability.
The government has strived to address these problems and is committed to an inclusive society that guarantees the welfare of its people, supported by transparent and accountable public institutions.
Last Updated: Apr 07, 2017