Our comprehensive assessment of Costa Rica's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Costa Rica, as well as the latest industry developments that could impact Costa Rica's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Costa Rica before your competitors.
Costa Rica Country Risk
External Tailwinds Supporting Regional Underperformers
Central American outperformers Costa Rica and Panama are facing a more challenging road ahead in the coming years. As real GDP growth slows in Panama on the back of the end of canal construction, establishing fiscal discipline will be crucial. Should the country fail to rein in spending in an environment of lower growth, this would likely cool investor enthusiasm toward the country. Similarly, Costa Rica is also facing a challenging fiscal outlook - a situation which is only exacerbated by the fragmented political environment.
In contrast, our outlook for most of Central America's underperformers is brightening. Guatemala, Honduras and El Salvador will benefit from stronger US demand for their manufactured goods, rising remittance inflows and lower oil prices in the quarters...
Costa Rica Industry Coverage (9)
Costa Rica Agribusiness
BMI View: The Central America region continues to struggle with disease outbreaks in the coffee sector, which decimated the 2013 crop. We believe that coffee production will remain at risk over the next few years as the nature of subsistence farming will limit investment into safeguards. Countries in Central America are generally dependent on corn imports and we expect the corn production deficit to widen over our forecast period. Strength in the US dollar over this time frame will hurt the capital accounts of the region's countries. We expect Central America to remain self-sufficient in sugar and even increase its potential for sugar exports. The sugar industry has potential to attract investment over the medium term.
|Honduras Agribusiness To Outperform|
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Costa Rica Autos
Food & Drink
Costa Rica Food & Drink
BMI View: The economic trajectory for the region remains divergent. Despite our expectations for slower real GDP growth in Panama in the next several years, it will remain the regional outperformer. On the other hand, we have a more mixed outlook for growth in the 'northern triangle' countries. While they will likely benefit from improved agricultural yields and stronger US demand for manufactured goods, Guatemala, Honduras and El Salvador are still vulnerable to significant structural macroeconomic weaknesses.
Headline Industry Data (regional averages)
2014 per capita food consumption (USD) = +4.82%; forecast compound annual growth rate (CAGR) 2013 to 2018 = +4.18%.
2014 alcoholic drink sales (litres) = +4.41%; forecast CAGR 2013 to 2018 = +2.30%....
Costa Rica Freight Transport
Moderate To Strong Freight Growth In 2015
2015 will see moderate to strong growth across the Central American freight industry. The positives will be a small acceleration in macro-economic growth and trade in most of the Central American economies, benefitting the dominant freight mode, road haulage, as well as boosting activity levels at some of the largest ports in the region. Air freight will see more modest growth, in the low single percentage digits. Despite some interesting efforts to rehabilitate some of the region's railways, it will take some years before any concrete results can be seen. In terms of industry news, the big headlines concern the expected increase in competition among ports when the widening of the Panama Canal is completed in 2016, and Nicaragua's extremely ambitious and enigmatic 'Grand Canal' project to compete with the Panama Canal. More immediately and pragmatically, we are tracking...
Costa Rica Infrastructure
BMI View: We currently forecast an average of 2.3% real growth in Central America's construction industry value for 2015, which is considerably higher than our regional average estimate for 2014 at 0.4%. We expect Honduras, El Salvador and Nicaragua's construction industries to return to positive growth in 2015 while Panama's will contract, as the completion of the Canal expansion nears its end.
We see high risks, small scale and limited growth opportunities across the region as a whole. A crucial factor underpinning our forecasts for infrastructure investments in future years is political and security risk. This is a particular concern in El Salvador,...
Costa Rica Insurance
Pharmaceuticals & Healthcare
Costa Rica Pharmaceuticals & Healthcare
BMI View: A growing ageing population, favourable tax incentives and high demand for medicines confirm Central America's ability to continue offering revenue-generating opportunities to foreign drugmakers. However, the region's growing preference for traditional medicines could interfere with productive sales in coming years.
Headline Expenditure Projections
Pharmaceuticals: USD3.7bn in 2014 to USD3.9bn in 2015; +5.6%. Our forecast has been revised upwards since Q115 due to historical data.
Healthcare: USD16.8bn in 2014 to USD17.8bn in 2015; +5.7 %. Our forecast has been revised upwards since Q115 due to revised historical data.
Costa Rica Telecommunications
BMI View: Although the rise in number portability, with four out of eight countries having implemented or in the process of implementing a form of number porting, should encourage an increase in competition, BMI believes that it would be challenging for newcomers like Xinwei to penetrate the market. Mobile forecasts show much slower growth across the board, with only Nicaragua offering any real growth potential. Increasing government interference, as is the case of Guatemala, is a worrying new development.
Costa Rica Tourism
Costa Rica's tourism market will perform well in 2015, with strong arrivals from North America reflecting its attractive market fundamentals. We expect this to feed through into rising investment in the tourist industry, especially as the market cements its pre-eminent position within Central America.
We expect Costa Rica's tourism industry to perform well in 2015, with overall tourist arrivals projected to increase by 5.4% to 2.8mn. This strong growth confirms our review that Costa Rica is one of the most attractive tourism markets in the region, with attractive destinations, good infrastructure and high levels of security making it a popular destination, particularly for tourists from North America. Indeed, we expect arrivals from North America to increase by 7.2% in 2015 to 1.3mn as rising GDP growth in the US in particular encourages departures. Arrivals from Latin America will also grow, by 4.1% to 1.1mn, indicating that...