San José, Costa Rica, since 1956

Exports Are Cooling, Especially to the U.S.

Month-on-month export growth dropped to its lowest level in three years last month, as January exports grew only 3.8% over January 2007.
Exports to the United States, Costa Rica’s biggest trading partner, dropped by 6%, an indication that the U.S. economic slowdown may be having a negative effect here.
The slowdown in growth makes President Oscar Arias’ goal of exporting $16 billion annually by the end of his term in May 2010 seem all but impossible. Last year, Costa Rica exported $9.3 billion.
Still, Emmanuel Hess, head of the Foreign Trade Promotion Office, declined to take a poke at Arias’ goal, saying it was still the government’s guiding policy.
“We are not abandoning our intention,” said Hess, who just took over from a predecessor whose resignation coincided with slowing export growth.
Hess and Foreign Trade Minister Marco Vinicio Ruiz said they are proposing greater cooperation between the government bureaucracy and the private sector, but they gave few details.
They also pointed to efforts to diversify Costa Rican exports by diverting them away from the struggling U.S. economy and toward other trading partners, such as China and the Caribbean community.
“What I say is, well, if there’s weakness in a market, we redouble our efforts and look for others,” Ruiz said.
Chief culprits for the slowing growth include everything from bananas to the integrated circuits exported by Intel Costa Rica, and though some of the individual dips in the January numbers can be chalked up to cyclical fluctuations, export growth in general has recently stagnated.
Though in its first year and a half, the Arias administration was blessed with month-on-month growth of between 16% and 18%, it dipped below 15% last May and never quite recovered, delivering growth of only 14% that year.
To reach Arias’ goal of $16 billion in exports by 2010, growth needs to be a steady 16% percent.
Hess said Arias set his export goal in 2006 with the assumption that the Central American Free-Trade Agreement with the United States (CAFTA) would be implemented by now, and that sluggish export growth could be partly blamed on the unresolved CAFTA drama.
Textile exports, for example, have been dropping for some time thanks to CAFTA uncertainty, and this January were down 23.4% compared to last January, off $6.73 million (see story on Page 17).

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