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Contact the Central American Group to establish nearshore manufacturing operations in the Green Park Free Zone.
The Central Bank raised its growth projection for the country’s economy for this year from 2.7% to 3.3% and from 3.5% to 3.6% for 2024.
Diverse sectors drive economic growth in Costa Rica
Economic growth in Costa Rica in 2023 will continue to be led by business services, information and communications, manufacturing, and commerce activities for the remainder of the year. This assessment is according to the most recent Monetary Policy Report (IPM) issued by the Central Bank of Costa Rica (BCCR).
According to the most recent April report, 6.5% and 6.8% growth are estimated for business services activity expansion in 2023 and 2024, respectively. Last January, the estimates were 5.6% and 6%, respectively. Economic growth in Costa Rica in these activities has been, thus far, greater than what was projected at the beginning of the year.
Free zone companies propel the export sector
This economic growth in Costa Rica would be driven by exports of services from companies in free zones, among which financial management consultancy and business support activities stand out, and by domestic demand for advertising, legal and accounting services, as well as by the increase in vehicle rental services and travel agencies associated with the expected increase in tourist arrivals
Regarding information and communications, the Costa Rican Central Bank forecasts an acceleration in average economic growth in Costa for the 2023-2024 biennium. It projects that it will be located at 8.1% against the 6.7% estimated in the previous January.
This performance would be associated mainly with greater external demand for information, programming, and computer consulting services. This set of circumstances is in accordance with the technological innovations fostered by the global advance of the digital economy.
Costa Rica companies are keeping up with new technology
Added to this are the investments made by Costa Rican companies in technological infrastructure for reliable data processing, storage, and connectivity due to the prevalence of remote work and the transformation of applications towards cloud-based solutions to meet the growth of the country’s internal demand.
The BCCR also revised upwards the manufacturing growth estimates for 2023. The projected growth for this year is 3.5%, compared to the 1.4% estimated in the MPI last January.
This result would be due to a better company production performance under the free trade zone regime. This performance has attenuated the lower forecast for the activity of companies under the definitive regime, which domestic companies mainly utilize. The latter would be affected by a weak growth in local demand, given the link with the agricultural activity that was added to the lower external demand for tires and sugar.
By 2024, economic growth in Costa Rica is expected to be 1.2%. This projected performance is consistent with the evolution of external demand supplied by companies in the free zone regime and by companies in the definitive regime that produce for the domestic market.
Meanwhile, the BCCR forecasts that commercial and vehicle repair activity will grow 2.9% in 2023, which is 0.3 percentage points more than the estimate in the January IPM. This aligns with the evolution projected for general economic growth in Costa Rica.
The expected growth for 2024 is 2.8% and is linked to the evolution of construction, agricultural, accommodation, and restaurant services.
The Central Bank raised, from 2.7% to 3.3%, its growth projection for the overall national economy for this year and from 3.5% to 3.6% for 2024, compared to estimates last January.
The projected growth for 2023 is due to a greater external demand for medical devices, business, and computer services. A more significant expansion of internal demand is also estimated as a result of the improvement in disposable income due to the more substantial gain in terms of trade.
For the remainder of 2023 and into 2024, economic growth in Costa Rica will be characterized by a stable and diversified economy, a strong services sector, a vibrant tourism industry, high-tech and knowledge-based industries, renewable energy production, and the development of a workforce that can keep up with the country’s economic expansion.
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