OECD ECONOMIC SURVEY OF COSTA RICA
San José, 6 February 2023
Costa Rica’s growth outperformed other countries in the region
Note: LAC 6 includes Argentina, Brazil, Chile, Colombia, Costa Rica and Mexico. Source: OECD Economic Outlook 110 database.
Note: LAC includes Chile, Colombia, Mexico, and Brazil.
Source: OECD Economic Outlook database.
2
Real GDP per capita Index 2000 = 100
90 100 110 120 130 140 150 160 170 90 100 110 120 130 140 150 160 170 2000 2005 2010 2015 2020 LAC CRI OECD
Strong export performance supported a rapid recovery from the pandemic
Note: Real exports include all goods and services produced by residents abut consumed abroad. They are computed as the ratio of the value of exports of goods an services to the export deflator.
Source: OECD Economic Outlook database.
3
Index of real exports 2020Q1 = 100 60 70 80 90 100 110 120 130 60 70 80 90 100 110 120 130 2020 2021 2022 CHL CRI MEX OECD
Main exported products
Note: The ten main exported products in 1994 are displayed in green in both panels. Source: COMEX based on data from PROCOMER.
4
The goods export basket has become increasingly sophisticated
Medical devices 35% Banana 7% Pinneapple 7% Food preparations 5% Palm oil 1% Electric cables 1% Dosed immunological products 1% Iron or steel bars 1% Tropical fruits preserved 1% Others 38% B. 2021 Banana 22% Coffee 12% Pineapple 2% Jewelry 2% Underwear 2% Hair dryers 2% Melon 2% Beef 1% Shrimp 1% Ornamental plants 1% Others 53% A. 1994
% of all exports
Unemployment remains high
Note: LAC refers to Chile, Colombia, Mexico, and Brazil. Source: OECD Economic Outlook database.
5
Unemployment % of labour force 0 5 10 15 20 25 0 5 10 15 20 25 1990 1995 2000 2005 2010 2015 2020 CRI OECD LAC
Inflation remains high despite some recent decline
Note: Inflation expectations are the median one-year ahead expectations according to a survey run by the Central Bank. The survey was not conducted between December 2020 and November 2021.
Source: Banco Central de Costa Rica.
6
-2 0 2 4 6 8 10 12 14 -2 0 2 4 6 8 10 12 14 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Central Bank target range Headline inflation Policy rate Inflation expectations %
Growth is projected to moderate in 2023
OECD Economic projections for Costa Rica
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Source: OECD Economic Survey of Costa Rica, February 2023.
Annual percentage change 2022 2023 2024 Gross domestic product 4.3 2.3 3.7 Private consumption 3.6 2.3 2.7 Gross fixed capital formation 1.6 -0.5 5.5 Exports 12.2 8.8 9.1 Imports 5.5 8.5 7.5 Unemployment rate (%) 12.2 11.4 11.1 Consumer price index 8.8 6.9 4.2
Maintaining fiscal prudence
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The budget deficit has decreased
Note: Data refer to central government only. Total revenues do not include social security contributions. The primary balance is defined as the difference between government total revenues less total government spending, excluding net interest payments. A positive value implies that a government is saving, before taking into account net interest payments. The budget balance adds net interest payments to the primary balance and describes the government financial needs.
9
Source: Finance Ministry; OECD projections for 2022. Budget balance and primary balance % of GDP -10 -8 -6 -4 -2 0 2 4 6 2006 2008 2010 2012 2014 2016 2018 2020 2022 Budget balance Primary balance
Full implementation of the fiscal rule is key
Note: The chart depicts central government public debt. The “Current government fiscal plans” scenario assumes GDP growth as in table 1.1 until 2023, with a gradual transition to OECD long-term model estimates of potential output thereafter. Inflation is projected as in table 1.1 until 2023 and a gradual convergence to 3% thereafter. Fiscal assumptions are those outlined in table 1.3 and remain constant until 2028 when aging costs, in the form of higher pensions and health costs, will gradually start to kick. The “Ambitious reforms“ scenario assumes the implementation of reforms described in Figure 1.2. Both “Current government fiscal plans” and “Ambitious reforms” scenarios assume full implementation of the fiscal rule. The scenario “Spending growing above the limits established by the fiscal rule” assumes that primary spending is 1% of GDP higher than in current government fiscal plans and that revenues remain as in current government fiscal plans. In the
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fiscal plans. All scenarios include ageing costs. Source: OECD calculations. Public debt % of GDP 0 10 20 30 40 50 60 70 80 0 10 20 30 40 50 60 70 80 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Spending growing 1 % of GDP higher than the limits established by the fiscal rule Ambitious reforms Higher interest rate Current government fiscal plans
“Higher interest rate scenario” the interest rate is 100 basis points higher over the projection period and that primary spending and revenues remain as in current government
The compensation of government employees accounts for a large share of government spending
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Compensation of government
% of total revenue, 2020 0 10 20 30 40 50 60 0 10 20 30 40 50 60 JPN COL CHE MEX NZL SWE GBR TUR OECD DNK NOR ESP USA CHL CRI
Source: ILOSTAT; IMF Global Finance Statistics.
employees
Tax revenues are comparatively low
Note: LAC refers to Chile, Colombia, Mexico, Argentina and Brazil. All averages are unweighted.
Source: OECD Revenue Statistics database.
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% of GDP, 2020 or latest year 0 10 20 30 40 50 0 10 20 30 40 50 MEX COL CHL IRL CRI LAC TUR USA CHE AUS KOR ARG ISR JPN BRA NZL GBR OECD CZE CAN PRT HUN POL ESP DEU NOR GRC NLD FIN AUT SWE ITA BEL FRA DNK
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% of total taxation Source: OECD Global Revenue Statistics. 0 20 40 60 80 100 0 20 40 60 80 100 CHL COL MEX OECD (2019) CRI Social security contributions Taxes on income, profits and capital gains Taxes on payroll and workforce Taxes on property Taxes on goods and services
taxes
The tax system is overly reliant on social security contributions
Other
Informality remains high
Note: Informality is defined as the percentage of workers in employment meeting one of these conditions
not contributing to the social security system,
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% of total employed population
1)
2)
who
are not
Property
and
not
a formal
Source: Instituto Nacional de Estadística y Censos: Encuesta Contiínua de Empleo. 0 10 20 30 40 50 60 0 10 20 30 40 50 60 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
unpaid workers or 3) self-employed workers and employers
have companies that
registered in the National
Registry
do
keep
accounting.
Own-account Employees
Boosting productivity
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Growth will fall as the demographic bonus fades
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Contributions to potential growth % pts -1 0 1 2 3 4 5 6 -1 0 1 2 3 4 5 6 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 Labour productivity Employment Capital per worker Potential output
Source: OECD long-term projections based on Guillemette and Turner, 2018.
Labour productivity is low
Note: OECD average calculated as the simple average across OECD countries with available data.
OECD Productivity database.
17
0 10 20 30 40 50 60 70 0 10 20 30 40 50 60 70 COL BRA MEX CHN CRI CHL PRT HUN SVK POL ESP CZE NZL FRA OECD DEU AUS USA
Source:
1000s of PPP-adjusted USD per capita, 2021
Product markets are highly regulated
Note: The overall PMR indicator measures the regulatory barriers to firm entry and competition in a broad range of key policy areas, ranging from licensing and public procurement, to governance of SOEs, price controls, evaluation of new and existing regulations, and foreign trade. The PMR indicators range from 0 to 6. A lower value represents a more competition friendly regulatory regime
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Source:
Overall PMR score Index from 0 to 6 (most restrictive) 0.0 0.5 1.0 1.5 2.0 2.5 0.0 0.5 1.0 1.5 2.0 2.5 GBR DNK ESP DEU NLD SWE AUS NOR LTU NZL EST LVA SVN CZE HUN ITA PRT FIN OECD IRL CHL ISR ISL POL AUT JPN CHE SVK GRC FRA MEX LUX BEL KOR CAN COL TUR CRI
OECD Product Market Regulation database.
Improving education and equality of opportunities
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Spending on education is high
Note: Data for Costa Rica refers to 2019. LAC refers to Chile, Colombia, Mexico, and Brazil. The education budget is distributed to the Ministry of Public Education (Preschool, I and II Cycles, III Cycle and Diversified Education); the Special Fund for Higher Education (5
and the
and about
20
public universities:
TEC, UNA, ITCR, UNED, UTN),
50 other
Source:
Education Database. Spending in education % of GDP, 2018 0 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 NOR CRI ISL SWE BEL ISR FIN BRA ZAF DNK NZL FRA CAN AUT NLD USA EST OECD LAC PRT CHL AUS GBR COL KOR POL SVN TUR DEU CZE ITA MEX ESP LVA GRC HUN SVK LUX RUS LTU JPN IRL
UCR,
Care Network, CEN-CINAI, INA
institutions.
OECD
Too many Costa Ricans leave school too early
Percentage of 25-34 year-olds with below upper-secondary education as the highest level attained
Note: LAC refers to Chile, Colombia, Mexico, Argentina, and Brazil.
Source: OECD Education Database.
21
0 10 20 30 40 50 0 10 20 30 40 50 KOR SVN CAN IRL USA SVK POL CZE LTU CHE GRC ISR AUS FIN NLD LUX AUT LVA EST FRA GBR CHL BEL HUN NZL OECD DEU SWE DNK PRT NOR ISL ITA COL ARG LAC ESP BRA TUR MEX CRI 2021
There is room to improve education quality
Note: LAC refers to Chile, Colombia, Mexico, Argentina, Brazil, Panama, Peru, and Uruguay. PISA is the OECD's Programme for International Student Assessment. PISA measures 15-year-olds’ ability to use their reading, mathematics and science knowledge and skills to meet real-life challenges. A higher value indicates that a student has on average a higher ability to use as specific skill (reading, mathematics or science knowledge) to meet real-life challenges.
Source: OECD PISA International Dataset.
22
Reading score in PISA 2018 300 350 400 450 500 550 300 350 400 450 500 550 PAN PER ARG COL BRA LAC MEX CRI URY CHL GRC SVK TUR LUX ISR ISL LTU HUN ITA LVA CHE AUT NLD OECD CZE PRT FRA BEL SVN DEU NOR DNK AUS JPN GBR USA NZL SWE POL KOR IRL FIN CAN EST
There are few graduates in science, technology, engineering and math
Note: The distribution of graduates by field of study is calculated as the share of graduates from each field over the total of graduates. STEM includes all graduates (short-cycle tertiary, bachelor's, master's, and doctoral degrees) with a degree in natural sciences, mathematics and statistics; information and communication technologies; and engineering, manufacturing and construction. LAC refers to Chile, Colombia, Mexico, Argentina, and Brazil.
23
Source:
(2022), Education at a Glance
graduates
STEM % of all graduates, 2021 or latest year 0 5 10 15 20 25 30 35 0 5 10 15 20 25 30 35 ARG BRA ISL CRI LVA BEL NLD PRT LAC TUR DNK AUS LUX ITA USA POL NOR HUN MEX COL IRL FRA GBR OECD CHL GRC ESP SVN SVK CHE LTU SWE EST FIN AUT CZE DEU
OECD
Tertiary
in
Female labour market participation is low
Working-age (15-64) labour force participation rate
Note: LAC is a simple average of Brazil, Chile, Colombia and Mexico.
Source: OECD Labour Force statistics.
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%, 2021 0 20 40 60 80 100 0 20 40 60 80 100 TUR MEX CHL LAC ITA CRI COL BRA GRC KOR OECD BEL POL USA ISR CZE IRL LUX FRA SVK ESP HUN SVN AUT LVA JPN PRT DEU GBR AUS CAN DNK EST LTU FIN NZL NOR CHE NLD SWE ISL
Women Men
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