Costa Rica country brief

Overview

Australia and Costa Rica enjoy close and warm relations, based on trade, investment and cooperation on a range of international issues, including the environment, agricultural development, climate change, transnational crime and disarmament.

The two countries established diplomatic relations in 1974, when Australia’s first Ambassador to Costa Rica, Owen Davis, presented credentials. The Australian Embassy in Mexico City, is accredited concurrently to Costa Rica and Costa Rica opened an Embassy in Canberra in 2017. Australia has an Honorary Consul in San José and Costa Rica has a Consulate-General in Sydney.

Costa Rica is situated in the southern half of the Central American isthmus, with both Caribbean and Pacific coastlines. It shares borders with Panama in the south and Nicaragua in the north. Costa Rica is a tropical country with a rainy season (May to November) and a dry season (December to April).

Costa Rica’s population is approximately 4.9 million (2016 est). Roman Catholicism is the main religion with around 76 per cent of the population identifying as Catholic. Spanish is the official language of Costa Rica.

Political overview

During Pre-Colombian times, the area that now includes Costa Rica was where the Mesoamerican and South American native cultures met.  Cultural systems were also influenced by those of the Isthmo-Columbian area.

Although explored by the Spanish early in the 16th century, harsh terrain, brutal heat, resistance by indigenous groups, and pirate raids thwarted early colonisation. It was not until 1563 that the permanent settlement of Cartago was established in the cooler, fertile central highlands. In 1821, Costa Rica declared independence from Spain and in 1823 joined the (short-lived) United Provinces of Central America, until it disbanded in 1838.

In 1949, the Costa Rican legislature, under President Todoro Picado, annulled the presidential election of opposition candidate Otilio Ulate, triggering a rebellion by Army Commander José Figueres.  Around 2000 Costa Ricans were killed during the 44-day civil war. The conflict was won by Figueres, who led a provisional junta for 18 months. He abolished the military and introduced a new constitutional assembly. The junta then handed power to Ulate. Since then, Costa Rica has not experienced any significant political violence, and to this day has no standing army.

System of Government

Costa Rica has a democratically elected representative government with a strong executive.  The President, who is the head of state and government, is elected for a four-year term.  Consecutive re-election is not permitted. The 57‑member unicameral National Assembly is elected for a four-year term from seven multi-seat constituencies corresponding with the country’s seven provinces.

Recent developments

President Luis Guillermo Solis was elected in 2014 in a second round run-off with 77.8 per cent of the vote.  The next presidential and legislative elections are due in February 2018.

President Solis is expected to continue to pursue pro-business policies until the end of his term. There are currently no clear candidates for the 2018 elections.

Foreign and Trade Policy

Costa Rica is a member of the Organisation of American States, the Community of Latin American and Caribbean States (CELAC) and the Central American Integration System (SICA).

It is an observer of the Pacific Alliance and has indicated its interest in becoming a member.

On 16 January 2017 Costa Rica's government filed a claim against Nicaragua at the International Court of Justice (ICJ). The new claim follows on from a prior riverine dispute, on which the ICJ ruled in 2009 but that continues to cause friction between the neighbouring countries.

On 21 March, President Solis met US Vice President Mike Pence. Costa Rica is a key US ally in Central America and the country has benefited from close cooperation on counter‑narcotics trafficking.

In 2007, Costa Rica became the first country in Central America to switch diplomatic recognition from Taipei to Beijing, a deal linked to Beijing’s agreement to buy US$300 million in bonds. In July 2013, China’s President Xi Jinping visited Costa Rica, announcing a US$400 million loan for road infrastructure and 16,000 public transport vehicles.

Costa Rica, collectively with Central America and the Dominican Republic, has FTAs with the United States (since 2009) and the European Union (since 2012).

Bilateral Relations

The 2006 Australian Census recorded 313 Costa Ricans living in Australia with an additional 241 claiming Costa Rican heritage.  The Costa Rican diaspora was so small as to be not captured in the 2011 Census results.

Australia and Costa Rica both participate in the Cairns Group of agricultural exporting countries, the Forum for East Asia-Latin America Cooperation (FEALAC) and the WTO Trade in Services Agreement negotiations. Australia is an observer of SICA.

In 2001, the Australian Government established the Council on Australia-Latin America Relations (COALAR) which aims to enhance commercial, political and cultural relations between Australia and Latin America. Since its inception, COALAR has been active in promoting business, education, tourism and cultural links between Australia and Latin America. For updates on COALAR activities and information on the annual grants program, follow COALAR on Facebook.

People to people links

In the year ended March 2017, there were around 800 short-term arrivals from Costa Rica, an increase of 48 per cent over the previous year. Over the last five years, the average annual growth rate in arrivals from Costa Rica was 17 per cent. In the year ended March 2017 there were 2,200 short-term resident departures from Australia to Costa Rica, an increase of nine per cent on the previous year. In the last five years, the average annual growth in departures from Australia to Costa Rica was two per cent.

Costa Ricans are eligible to apply for Australia’s Endeavour Awards Scholarships and Fellowships. The program opens annually in April and closes in June.

Development assistance

Since 2010, Costa Rica has been eligible to receive Australia Award Fellowships but none have been granted to date.

From 2010 to 2014, Australia provided $100 million in official development assistance to Latin America, including 250 Australia Awards scholarships. Costa Rica received 29 Australia Awards Scholarships. The regional program has now closed, though some activities that have already been funded will continue until 2018.

The Australian Embassy in Mexico City manages a Direct Aid Program (DAP), which provides financial support to a broad range of projects in Costa Rica, including community development projects and those designed to address challenges in vulnerable communities. In 2016-17, two Direct Aid Projects were funded: a project for clean sweet potato production in rural areas; and a project to strengthen food security by teaching women vegetable production in Nicoya.

Economic overview

For latest economic data refer to Costa Rica [PDF 31 KB]

Economic and trade policy directions

Since 1949, military spending has been redirected into education, health and social services. Consequently, Costa Rica has significantly higher standards of living and social benefits then most other Central American countries. Likewise, Costa Rica does not share the regional reliance on remittances. Although it still maintains a large agricultural sector, Costa Rica has expanded its economy to include strong technology and tourism industries. The standard of living is relatively high. Land ownership is widespread. However, poverty has remained at 20-25 per cent for nearly 20 years, slowly eroding Costa Rica’s safety net.

Costa Rica is seeking to join the OECD and is considering joining the Pacific Alliance.

Costa Rica, collectively with Central America and the Dominican Republic, has FTAs with the United States (since 2009) and the European Union (since 2012).

Economic outlook

In 2016, Costa Rica’s economy grew by 4.3 per cent. Growth is expected to be sustained above four per cent for the next four years. Inflation is forecast to be around 2.1 per cent in 2017.

Trade and Investment

Economic and trade relationship

Costa Rica is Australia's largest trading partner in Central America. In 2016, two-way merchandise trade between Australia and Costa Rica was $140 million. Mainly imports ($114 million) including medical instruments, coffee, and textiles. Three Australian companies operate in Costa Rica.

Export opportunities

Despite the modest nature of two-way trade, Australian companies are taking advantage of niche opportunities to provide professional services throughout the region. The Australian Government, through our post in Mexico City and our Austrade representation there, helps raise the profile of Australian companies and ensures that Australian businesses and exporters are well positioned to make the most of emerging opportunities. Australia’s Honorary Consul in San Jose also assists the Australian Embassy in Mexico to identify commercial opportunities in Costa Rica.

Education

There is scope to promote the Australian education system as an attractive option for tertiary students and students wanting to study English. Costa Rica faces a shortage of skilled labour, with potential opportunities for the provision of vocational training.

Agricultural inputs

With a strong agricultural base, Costa Rica demands farm inputs and other related technologies. Agribusiness is a potential growth area for Australian companies, which are already taking advantage of opportunities to provide animal genetics and farm technologies to Costa Rica.

Information technology and communications

As Central American countries move into the digital age there is an increasing demand for IT products, including broadband internet, computers, cables, routers and cellular services equipment. A number of foreign companies have established call centres in Costa Rica.

Infrastructure development

Infrastructure renewal in Costa Rica may provide opportunities for Australian involvement. Projects include airport terminal expansions, new highways including toll roads, port infrastructure, canal development and public transport.

Health

Austrade has assisted Australian businesses such as Cochlear in Costa Rica to position the company as a preferred supplier of hearing implants.

High level visits

February 2004: Trade Minister Mark Vaile visited.

September 1984: Foreign Minister Bill Hayden visited.

Last Updated: July 2017


Last Updated: 6 July 2017