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Industrial and Construction Industries Hit Hardest in Costa Rica

Jun 08

Tourism, Industry and Construction in Costa Rica Saw Low Growth This Year.

As the year comes to a close, more depressing statistics about the true effects of the economic crisis on Central America continue to be uncovered. The latest numbers state that the industrial and construction industries were the biggest hit with a measly growth of 5% for each. The previous year, the industrial industry experienced 8% growth while the construction industry had an impressive 18% growth. The production industry had an extremely low growth rate at 1.14%, while the hotel and commercial industries were also hard hit.

All these statistics were brought to light thanks to the Monthly Economic Activity Index (Imae), which was published by the Banco Central this past Saturday. The Index is a compilation of poll answers collected from 800 Costa Rica businesses.

As the economy is so tightly interconnected, the drop in construction led to a reduction in the production of construction materials such as cement and iron, leading to lost jobs and low profits. The industrial industry is watched closely because there are currently 240,000 people employed in the industry, and from July 2007 and July 2008, 12,000 jobs were lost. As a close second, there are 152,000 people that work in construction in Costa Rica, a number that has not changed over the past year. This of course affects the buying power of consumers, leading to lower sales totals for those offering goods and services.

In tourism, 8,000 of a total 100,000 (8%) jobs were lost between July 2007 and July 2008, and in commerce, the amount of jobs actually increased by 11,000 positions. The only industries that showed growth from now and last year were Costa Rica real estate and the government.

The Costa Rican tourism Institute (ICT) expects a growth of 7% in tourists from last years totals, though recent devastating floods in Puerto Viejo have caused occupancy levels to drop to an unprecedented 1%! After two low pressure systems swept through the region, flood waters displaced over 5,000 people and damaged crops and infrastructure in the region. However, despite the fact that all transportation routes have been fixed, and little damage remains, the reservation cancellations continue. With 35,000 people employed in tourism in the region, calls for help are going to the ICT to search for solutions. In the meantime, many hotel owners are offering up to 50% discounts, though 80% of bars and restaurants have simply kept their doors shut until a higher demand rolls around.

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