In many aspects, Costa Rica is a success story in terms of development. It is considered an upper middle-income country, which has shown a steady economic growth over the past 25 years. This growth resulted from an outward- oriented strategy, based on the 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, social contract and steady growth has resulted in one of the lowest poverty rates in Latin America and the Caribbean, where the proportion of the population with incomes below US $ 5.5 per person per day decreased slightly from 12.9 to 10.7 percent between 2010 and 2016.
The success of the country in recent decades is also reflected in its strong indicators of human development, which have contributed to move the country up the global ranks, higher than the other countries in the region.
While these achievements are celebrated, the country needs to focus on maintaining the steady growth, and in continuing poverty reduction.
During the global crisis in 2009, real GDP contracted 1 percent, but rapidly rebounded following the crisis, reaching one of the highest average real growth rates in Latin America between 2010 and 2016 (4 compared to 2.5 percent regional average). In the last two years, growth has weakened, and the projection for the end of 2019 is 2.0, partly due to a contraction in areas such as agriculture, commerce and construction. But a slight rebound is expected for 2020 and 2021, the forecast being 2.5 and 3.0 percent, respectively.
Costa Rica’s GDP per capita has tripled since 1960, reaching an average growth of 4.5 percent between 2000 and 2013, compared to the regional average of 3.8 percent for the same period.
Two pressing development challenges stand out: the fiscal situation and persistent inequality. These challenges affect the basic pillars of the Costa Rican development model: 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: Oct 10, 2019