Costa Rican Prospects Remain Attractive for Investors

Nuwire Investor (27th of February 2009), the influential investment journal, reports that Costa Rica still remains among the most popular second home destinations for U.S. citizens. The country has successfully branded itself as a premiere eco-tourism destination and the tourism sector is expected to continue growing.

Low cost of living and property taxes still attract retirees who are looking for cheaper options without too many compromises. However, the Central American country has not been immune to the global economic crisis and it is sensitive to the U.S. slowdown. After all, some 60 percent of tourists arriving into the country come from the United States and the U.S. also purchases the majority of Costa Rican exports. This makes the country overly sensitive to U.S. economic winds.

Although the fundamentals of the tourist industry still remain strong, the industry is feeling the effects of the economic downturn, with hotel occupancy falling.

The construction industry has also been affected by the financial crisis but continues to grow, albeit at a much slower rate. In 2007, the industry experienced an incredible 18% growth but that reduced to a still very impressive 5% for 2008.

The U.S.-Central America trade deal, known as the Central American Free Trade Agreement, took effect at the beginning of 2009. As the CAFTA floodgates open, Costa Rican monopolies and dominant companies will face fierce competition from multinational companies entering their markets. The ensuing price wars should benefit consumers.

The country's export industry will reap a bulk of the benefits as opportunities for Costa Rican products expand in the CAFTA region.

But the good news that Nuwire ultimately reports is that "long term prospects for Costa Rica remain attractive. The government is stable and has instituted good health care and educational systems. The country is has a wealth of natural resources, from beautiful beaches to pristine jungles and volcanic mountains, that attract a wide range of travelers. More importantly, it knows how to take care of its environment. Costa Rica was ranked 5th in the world by the Environmental Performance Index developed by Yale University and Columbia University. No doubt tourism and related developments will continue to boom. To avoid being a victim of its own success, Costa Rica will need to perfect the fine art of balancing development against preservation in order to protect its eco-friendly brand."

To read the full story by Yemi Kefli on Nuwire Investor click here

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