Costa Rica 

Costa Rica country policy

Policy established 30 May 2010

• ILC, bank guarantee or central public guarantee (conditional)
• The country ceiling is 1500 mln euro
• Early warning signal 750 mln euro
• - of which was used as at 2011-08-31 0 mln euro

Country class: 3

Costa Rica country facts

Atradius Dutch State Business Economic Research
Country Report last updated :  27 january 2010
Country :  COSTA RICA 

Political Situation
Robust Democratic Rule

Head of state
President Oscar Arias.

Form of government
Government of the Partido de Liberacion Nacional (PLN).

Internal Economic Situation
Recession In 2009

General situation
In 2009 Costa Rica’s small and open economy was badly hit by the global recession: real GDP declined by 1.8% after a severe contraction in Q1 (-4.5%) and Q2 (-2.4%) which has petered out in 2009H2 on the back of the recovering US-conditions and domestic demand fueled by government stimulus. It was the first recession since 1982. Still high state leverage on the economy (banks, energy, water, telecom); the private sector is split into a dynamic, export-oriented part (Intel and other high-tech multinationals) and traditional producers (agriculture). The banking sector is reasonably sound despite a relatively high exposure to exchange rate risk (high dollarisation) and more NPL’s as many US$-loans are due by clients with mainly colon-earnings, presenting a potential default risk. Large offshore sector, not supervised by the BCCR, remains a risk factor in the financial system. Despite strong decline to 4.8% yoy in Sept 2009, structurally high inflation. Low corruption: 47th out of 180 on the TI Index.
 
External Economic Situation
Reasonable Liquidity And Solvency

Main sources of foreign exchange
Manufactured goods, incl. maquilas/zonas francas (55%, a.o. microprocessors 15%), tourism, bananas (7%), coffee (3%).

Main foreign markets
USA (43%), Latin America (25%), EU (16%), Asia (14%).

Main expenses of foreign exchange
Raw materials (47%), consumer goods (26%).
 
Balance of payments 
Less high trade/current account deficits are being financed by decreased capital imports (FDI, portfolio), putting downward pressure on the colon.