by Reading the IMF provides great high-level economic analysis. This note is meant to provide some of my experiences to better illustrate some of the IMF’s findings, and also to cover some topics the IMF may not.
Last year, the IMF visit to Costa Rica concluded that the economy grew robustly in 2016. The government had taken steps to raise revenue and curb expenditures. However, there remained a major risk due to the country’s fiscal imbalance. Then, in May of 2017, the IMF issued a concluding statement, which “describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country”. These findings can be found by visiting the IMF pages:
“Costa Rica ranks better than most of Latin American countries in international competitiveness comparisons, but it should not be complacent. Enhancing transport infrastructure and public expenditure efficiency―especially in education―and competition policies should accelerate potential growth and foster inclusiveness.”
First of all, let’s tackle the infrastructure. Roads are a big issue in Costa Rica, and a well-developed transportation system is lacking. You’ll hear many of the locals talk about how they would improve the roads and bridges. After spending many hours on the road, I’ve wondered how much productivity the country is losing in traffic while the workforce is commuting to work. This issue may exist everywhere, but I feel like it exists more here in Costa Rica. Most urban locations are connected by roads that bottleneck at every river crossing, which exacerbates the problem. On the bright side, there is noticeable improvement recently, as some major bridges have been revamped. However, I think the big question is: Will these improvements sustain a growing population with an increasing availability of credit for consumers?
“Continued sectoral transformation towards high growth and higher value added services, supported by adequate public investment and regulatory framework, should make the economy more resilient to climate change and mitigate the latter’s regressive impact on income distribution.”
Costa Rica touts itself as a magnet of Foreign Direct Investment (FDI). The IMF’s assessment seems to call for higher value added services, and I tend to agree on this point. Most of the FDI I have seen pouring into this country is in the form of call centers and service centers. Foreign companies rely on relatively cheap labor to fill jobs that may not be at the forefront of any technological evolution. Roles that focus on Data Mining, Business Intelligence, Digital Banking and Machine Learning are few and far in between. Perhaps the country could do more to bolster the technology sector labor opportunities to reflect a global appetite for cutting edge labor force.
It’s easy to sound negative when one speaks about traffic and lack of jobs in the economy. These two points highlight some of the findings released by the IMF.
When travelling in Costa Rica, “pura vida” is the way of life here. So take it easy when visiting this country. The IMF won’t write about the diverse wildlife that calls this country home or the various landscapes that make up the country’s roughly 20,000 square miles. So, I’ve included some pictures here, enjoy!