Costa Rica | Overview: Work in progress

Mar 1, 2013

Costa Rica is seen as a beacon of stability in a troubled region. But it must confront a range of challenges if it’s to build on more than half a century of economic progress

Drive through the congested streets of Costa Rica’s lively capital, San José, and you get a feel for both the buoyancy and vulnerabilities of the economy.

A rash of American malls and fast food joints rub shoulders with makeshift street markets. Apartment blocks, many foreign-owned, have sprung up in brand new suburbs, but still look down on gullies populated by shanties. Car registrations have soared, reflecting the strength of the emerging middle class, but the streets are often gridlocked with congestion.

Costa Rica is a sterling success story in its challenging neighborhood of Mesoamerica. Alongside Panama, it has long been the darling of investors in Central America.

The country’s GDP growth has averaged 5% consistently over the last 60 years, says its finance minister Edgar Ayales. There have been only fleeting episodes of crisis, most notably in 1980 to 1981, following a debt explosion, he adds.

The country...

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