# Presentation: 086261

## Costa Rica & Nicaragua:

**Trade Americas Conference **
**Denver, CO**
**May 4, 2006**

***Costa Rica & Nicaragua:***
***Headlines, Prospects and Challenges***

## Overview

**Overview**

- Basics of Costa Rica
- The Costa Rican Economy
- Costa Rica: Positives/Challenges
- Best Prospects
- Recent Elections
- Costa Rica and CAFTA-DR
- Nicaragua: Economy and Best Prospects
- Upcoming Events – Costa Rica & Nicaragua

## COSTA RICA – The Basics

**COSTA RICA – The Basics**

- 4.2 million people
- 19,652 square miles         (size of West Virginia)
- 95% literacy rate
- Spanish Language       (English Widely Spoken)
- Democratic Republic
- Life Expectancy: 76 years

***Source: Countrywatch.com and La Nación Newspaper***

## Government Monopolies:
Telephony/Internet
Energy
Electricity
Insurance
Sugar cane alcohol production

- Government Monopolies:
- Telephony/Internet
- Energy
- Electricity
- Insurance
- Sugar cane alcohol production

**Costa Rica:**
**The Basics**

## ECON DATA

**Source: Central Bank of Costa Rica y Latinchronicle **

**ECON DATA**
**GDP per capita**

**2002**

**2003**

**2004**

**2005**

## ECON DATA

**Source: **_[http://devdata.worldbank.org/AAG/cri_aag.pdf](http://devdata.worldbank.org/AAG/cri_aag.pdf)_
**  ****WORLDBANK**

**ECON DATA**
**Average ****Annual Growth 94-04**

## ECON DATA

**Source: **_[http://www.bccr.fi.cr/documentos/publicaciones/archivos/Comunicado%20de%20prensa%20PM%202006-2007.pdf](http://www.bccr.fi.cr/documentos/publicaciones/archivos/Comunicado%20de%20prensa%20PM%202006-2007.pdf)_
** ****CENTRAL BANK OF COSTA RICA**

**ECON DATA**
**Inflation**

## ECON DATA

**Source: **_[http://www.census.gov/foreign-trade/balance/c2230.html#2005](http://www.census.gov/foreign-trade/balance/c2230.html#2005)_
** ****US CENSUS BUREAU**

**ECON DATA**
**Trade Balance - 2005**

- _TRADE SURPLUS: $ 176 MILLION__ _

## More Econ Data...

**More Econ Data...**

- U.S. Major Trade/Business Partner
- 50% of Costa Rican Exports
- 70% of Foreign Direct Investment
- Regional Hub for U.S./Foreign Firms
- Competition from China
- Forecast for Steady Econ Growth
- Retirement, not Remittances

## Why Costa Rica?

**Why Costa Rica?**

**Highly skilled labor force**
**Diversified economy**
**Political and social stability**
**Friendly business    **
**  ****environment**
**Attractive FTZ Tax Incentives     **
**  ****(*****until 2007*****)**

## Why Costa Rica?

**Why Costa Rica?**

**Wide use of English**
**Approx. 30,000 Americans in Costa Rica**
**Sophisticated consumers, **
**   “****early adopters”**
**Network of distributors**
**Close proximity to the U.S.**

## Challenges

**Challenges**

** ****Bureaucracy/Red Tape**
** ****Inefficient Monopolies**
** ****Broken Tax System**
** ****Poor Enforcement of IPR**
** ****Sluggish Judicial System**
** ****Deteriorating Infrastructure   **
**   ****(Ports, Roads)**
** ****High Social Benefit Expenditures**

##   RANK		INDUSTRY		   IMPORTS FROM U.S.- 2005						(Proj -US$ millions)

01	PAPER & PAPERBOARD			 	 172
02	COMPUTERS & PERIPHERALS		 	 138
03	PLASTIC MATERIALS AND RESINS	 	 158
04 	TELECOMMUNICATIONS EQ.			   60
05    AGRICULTURAL CHEMICALS			   60	
06    AUTOMOTIVE PARTS				   47
07	MEDICAL EQUIPMENT 			              20
08    CONSTRUCTION EQ.				   18

Source: CCG 2006

-   **RANK****	****	****INDUSTRY****	****	****   IMPORTS FROM U.S.- 2005****	****	****	****	****	****	****(Proj -US$ millions)**
- 01	PAPER & PAPERBOARD			 	 172
- 02	COMPUTERS & PERIPHERALS		 	 138
- 03	PLASTIC MATERIALS AND RESINS	 	 158
- 04 	TELECOMMUNICATIONS EQ.			   60
- 05    AGRICULTURAL CHEMICALS			   60
- 06    AUTOMOTIVE PARTS				   47
- 07	MEDICAL EQUIPMENT 			              20
- 08    CONSTRUCTION EQ.				   18
- Source: **CCG 2006**

**Best Business Prospects**

##    
Consumer Goods
Food Processing and Packaging
Construction Materials
Auto Parts
I.T.
Consumer Electronics
Dental Equipment
Hotel and Restaurant Equipment

- Consumer Goods
- Food Processing and Packaging
- Construction Materials
- Auto Parts
- I.T.
- Consumer Electronics
- Dental Equipment
- Hotel and Restaurant Equipment

**CRECEX Survey of Importers**

## CAFTA-DR Status Report

**CAFTA-DR**** Status Report**

-  El Salvador: March 1
-  Nicaragua, Honduras: April 1
-  Guatemala: May 1 ?
-  Dominican Republic: Summer ?
-  Costa Rica: Late 2006???

## CAFTA-DRand Costa Rica

**CAFTA-DR****and Costa Rica**

-  Submitted to Asamblea (October 19, 2005)
-  Hearings by International Commission
-  Approval by Asamblea:  Later in 2006 (?)
-  President-elect Arias: May 8
- Narrow Victory/Pro-CAFTA
-  New Asamblea: Fragmented
- (PLN: 25; PAC: 18;  ML: 6; PUSC: 4)

## NICARAGUA

**NICARAGUA**

## BASICS

**BASICS**

- 129,494 square km. (slightly smaller than NY)
- 5.5 Million pop.
- 67.5% Literacy Rate
- Democratic Republic
- Life Expectancy: 73 years

## ECONOMIC DATA

**ECONOMIC DATA**

- Source: Central Bank of Nicaragua

## ECONOMIC DATA

**ECONOMIC DATA**

- Source: Central Bank of Nicaragua

## INFLATION

**INFLATION**

- Source: Central Bank of Nicaragua

## U.S.-NICARAGUATRADE BALANCE

**U.S.-NICARAGUA****TRADE BALANCE**

- Source: Central Bank of Nicaragua

## BEST BUSINESS PROSPECTS

**BEST BUSINESS ****PROSPECTS**

| Rank | Industry | Imports from US 2005 
(Est. US$ Millions) |
| --- | --- | --- |
| 1 | Telecommunication Equipment | 29 |
| 2 | Computer Equipment & Peripherals | 23 |
| 3 | Vehicle Auto Parts & Equipment | 20 |
| 4 | Hotel & Restaurant Equipment | 8 |
| 5 | Construction Equipment | 6 |

- Source: CCG 2006

## WHY NICARAGUA?

**WHY NICARAGUA?**

- CAFTA-DR entry into force on April 1st
- Participant in the MCC
- Open to foreign investment – attractive tax incentives for tourism, free trade zones
- Lowest crime rate in Central America
- High quality, low-cost labor
- 70% of the population is under 30 years of age
- Estimated 10% of the economically active population speaks English
- Close proximity to the US

## MARKET CHALLENGES

**MARKET CHALLENGES**

- Maintain macroeconomic stability
- Resolve Sandinista-era property confiscation cases
- Land security & title protection

- Corrupt judiciary
- Reduce oil dependency
- Political instability
- Improve IPR enforcement

## Upcoming Events in CR – Nicaragua

**Upcoming Events in ****CR – Nicaragua**

- June 5-7		Apparel Conference of the
- 				Americas  -  Nicaragua
- Sept. 12-13	CRECEX Enlace Event - 					Costa Rica

## Regional Gold Key –Individual Company

- Regional Gold Key –Individual Company

- A CS First: only for the five CAFTA countries
- First country: first-day fee ($765)
- Second and following: second-day fee ($385)

## Contact Information

_**Contact Information**_

**  ****James McCarthy**
-    	Senior Commercial Officer
- 	Costa Rica
- 	Email: 	_[James.McCarthy@mail.doc.](mailto:James.McCarthy@mail.doc.gov)__[gov](mailto:James.McCarthy@mail.doc.gov)_
-   **Mark Cullinane**
- 	Commercial Officer
- 	Nicaragua
- 	Email:		_[cullinanemw@state.gov](mailto:cullinanemw@state.gov)_