As we approach the middle of 2023, there have been a lot of questions surrounding Costa Rica's economy and the possibility of a recession. The volatility in the US economy has understandably caused concern among real estate investors and business owners alike.
Many hypothesize the US will go into a recession and as history has shown in the past, Costa Rica will continue to mirror the United States behavior. However, if you look closely at current trends, it appears that Costa Rica is quietly positioning itself as the next major hub for technology and medical device.
While the pandemic and supply chain container crisis hurt many countries it strengthened Costa Rica’s economic position as the trend of nearshoring began to take flight. Many of the largest and wealthiest medical device companies from the US are moving operations to Costa Rica due to its economic stability, tax savings, and green energy availability. This trend has started with the medical sector but has the capacity to attract significant investment from other sectors like the pharmaceutical and private sectors.
Today 13 of the worlds top 20 original equipment manufacturers (OEM) have a base in Costa Rica. Companies like Baxter, Boston Scientific, and Medtronic have already established a significant presence in Costa Rica, investing millions of dollars, creating thousands of jobs and driving economic growth. In 2021 there were around 17,000 direct positions and in 2022 the industry created approximately 43,000 jobs. By November of 2021 the country had reached nearly $5 billion in precision and medical equipment exports representing a 36% growth on the same period in 2020. Today medical device is now Costa Rica’s top export by product. We believe that this trend will continue. Driving significant job growth, infrastructure development and economic expansion through trade surplus in the coming years.
As a real estate investor or developer, it is important to recognize the potential for growth in Costa Rica's economy as it directly impacts the real estate market. While there are always risks associated with investing, the current trends suggest that in contrast to Costa Rica’s historical nature to follow the patterns of the US, Costa Rica is actually silently positioning itself as a stable and attractive alternative location for billion dollar industries that were historically elsewhere. The growth in jobs is creating more wealth amongst the population and a better living environment which inherently leads to real estate prices continuing to increase. By investing now in areas that are likely to see growth in the coming years, real estate investors can position themselves for long-term success in Costa Rica's new economy.
In conclusion, the influx of jobs from the nearshoring trend, the proven economic stability, and the increase in global export is likely to have a positive impact on Costa Rica’s real estate market, creating new opportunities for investors and developers.
What do you think, is Costa Rica recession proofing?
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