Costa Rica

In-depth country-focused analysis on Costa Rica's economic, political and operational risk environment, complemented by detailed sector insight

Costa Rica

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.

Country Risk

Costa Rica Country Risk

BMI View:

External Tailwinds Supporting Regional Underperformers

Core View

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 and ensuring adequate employment 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 economic 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...

Costa Rica Industry Coverage (11)

Agribusiness

Costa Rica Agribusiness

BMI View:

BMI View: Central America's agribusiness industry will continue to grow - albeit inconsistently across sectors - through to the end of our forecast period in 2019/20. Along the way, the different sectors of the market will be forced to fight against headwinds that will directly impact output growth across some countries in the region. As a result of rising incomes and growing populations, as well as an improving real GDP outlook for the region, demand will outstrip supply in the livestock and grains sectors...

Autos

Costa Rica Autos

BMI View:

BMI View: Passenger vehicle sales in Central America in 2016 will continue to be driven by rising private consumption rates due to remittance inflows and a low inflationary environment, but will be tempered by a poor business environment and weaker growth in the construction sector will lead to declining growth in the commercial vehicle segment.

Central America - Fleet Size
Historical Data & Forecasts, 2014-2020 (units)
e/f = BMI estimate/forecast. Source: National sources, BMI ...

Food & Drink

Costa Rica Food & Drink

BMI View:

BMI View: Our consumer outlook for the region has brightened in recent quarters, as households benefit from low oil prices (which fuel their real purchasing power) and rising remittances flows from the US. Guatemala and Honduras, which have traditionally been vulnerable to structural macroeconomic weaknesses, will be the outperformers. Rising incomes will fuel growth in the food and drink sector, and the region will look increasingly attractive for food manufacturers as the rest of Latin America experiences a deteriorating consumer outlook and market saturation in the food sector. Thanks to its large and young consumer base, Guatemala will offer the strongest growth opportunities in Central America, while a strong tourism sector will drive premiumisation in Costa Rica.

Headline Industry Data (regional averages)

  • 2015 food consumption (US...

Infrastructure

Costa Rica Infrastructure

BMI View:

BMI View: We forecast an average of 2.1% real growth for the six construction industries of Central America in 2016. The decline from our forecast for 2015 - 4.4% - is mainly due to a steep drop-off in Panama as it concludes expansion of the Panama Canal and a normalisation of a housing boom in Nicaragua. The region will still offer significant opportunities: the transport sector will see strong growth as development funds target regional...

Costa Rica Infrastructure

BMI View:

BMI View: Growth in Costa Rica's construction industry will slow in 2016, as work on the USD1.4bn Reventazon Hydroelectric project concludes, and other major projects are delayed and fail to move through the pipeline. Project delays and a reduction in fixed capital formation will lead to lower growth rates in the infrastructure and non-residential segments, bringing down total construction value.

Latest Updates And Structural Trends

  • We maintain our view for a slowdown in real growth in Costa Rica in 2016 to only and then expand at a muted rate average annual rate of 1.5% over the next five years (2016-2020).

  • Poor project planning, permitting delays, and labour disputes have resulted in long delays for projects that would fill the void - exemplified by the long anticipated USD1bn Port of Moin and...

Insurance

Costa Rica Insurance

BMI View:

BMI View: Central America's insurance markets differ significantly in many ways from one another, in terms of scale, development, competition and product composition. Growth rates vary, although most outperform more developed markets despite ongoing structural issues and currency weakness in much of the region. Consolidation would bolster development in many markets, as would innovation in low-cost products, including microinsurance which has a limited presence in Central America.

BMI expects Central American insurance markets to continue to grow rapidly in the coming years. Annual growth rates outside Nicaragua, the region's underperformer, will consistently hit high single-digit rates, with some sectors consistently posting growth rates in excess of 10%. We highlight Costa Rica and El Salvador as markets...

Costa Rica Insurance

BMI View:

BMI View: The Costa Rican insurance industry is set for robust growth out to 2020. Growth in the life sector will outperform growth in the non-life sector as the former will benefit specifically from rising incomes and a desire for savings. The non-life sector will grow based on demand for insurance of big-ticket items such as property, motor insurance and robust growth prospects for the health insurance line. We are nevertheless cautious about the primacy of the former state-owned monopoly INS, which had premiums of over 80% of the total insurance industry in the country.

...
Headline Insurance Forecasts (Costa Rica 2013-2020)
2013 2014

Pharmaceuticals & Healthcare

Costa Rica Pharmaceuticals & Healthcare

BMI View:

BMI View: Legislative and regulatory improvements to the Central American healthcare system will further strengthen sector coordination, enhancing medical efficiencies and treatments over the long-term. The region's ageing population and dependence on pharmaceutical imports will increase foreign investment appeal as public health provision grows.

Headline Expenditure Projections

  • Pharmaceuticals: USD3.7bn in 2014 to USD3.9bn in 2015; +4.6%. Our forecast has been maintained since Q115.

  • Healthcare: USD16.5bn in 2014 to...

Costa Rica Pharmaceuticals & Healthcare

BMI View:

BMI View: The approved loan from the World Bank will help improve the institutional management and organisation of healthcare delivery in Costa Rica's public healthcare sector, as well as enhance the financial sustainability of Costa Rica's universal health insurance scheme. This investment into the public healthcare service system's operational efficiency will increase Costa Rica's attractiveness for foreign investment over the long term.

Headline Expenditure Projections

Pharmaceuticals: CRC446.94bn (USD830mn) in 2015 to CRC472.45bn (USD870mn) in 2016; +5.7% in local currency terms and 3.8% in US dollar terms. Forecast in...

Telecommunications

Costa Rica Telecommunications

BMI View:

BMI View: The region's telecoms markets are increasingly competitive, with four out of eight Central American countries having introduced mobile number portability. In several Central American markets, high mobile penetration rates have significantly slowed subscriber growth. However, markets such as Nicaragua offer considerable growth potential. Government intervention remains a problem in some regional markets such as Guatemala, where it is seemingly increasing. Across the region, data-driven 3G/4G services offer strong future potential and the region's largest operators are investing...

Tourism

Costa Rica Tourism

BMI View:

BMI View: Costa Rica will experience strong inbound tourism growth in 2016, buoyed by improving arrivals from the US, the country's key source market. Growth will remain steady throughout the forecast period, making Costa Rica one of the most attractive tourism markets in Central America.

...
Key Forecasts (Costa Rica 2013-2020)
2013 2014e

Latest Costa Rica Articles

  • An unsettled political and economic environment in the wake of the Brexit v...

  • We maintain our above-consensus forecast for the year, with Brent and WTI f...

  • The 2015-2016 El Niño episode had a severe negative impact on agricultural ...

Latest Costa Rica Blogs

  • The rise of the Pacific Alliance may signal the emergence of a two-track ec...

  • Business Monitor International (BMI) has published a new special report, ‘C...

Latest Costa Rica Podcasts

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