OECD Economic Surveys

Costa Rica's economy is performing well, with growth driven by increasing specialization in high value-added manufacturing and services. While the fiscal situation has improved, ensuring long-term fiscal sustainability remains a priority. To achieve this Costa Rica should focus on reducing public debt by sticking to the fiscal rule, introducing spending reviews to improve public spending efficiency and raising more tax revenues by expanding tax bases. Facilitating women's labour market participation and reducing informality are crucial for reducing income inequality and poverty. This will require expanding access to early education and care and a comprehensive strategy to reduce informality. This strategy should include reducing the administrative and economic burdens associated with establishing formal business. Costa Rica has set ambitious targets to decarbonize its economy. Achieving these targets and adapting to climate change will require expanding and diversifying renewable energy and improving the management of waste and water. Openness to trade has spurred growth, but many workers, firms and regions have yet to benefit from it. This would require addressing skills shortages, a critical challenge to Costa Rica's attractiveness for foreign direct investment. Further optimizing trade policies, fostering innovation and improving infrastructure are also vital to maximize trade benefits.