Health of domestic economy worries tourism

July 18, 2008

The tourism sector is concerned about the health of the domestic economy and its impact on tourism by nationals and residents. The National Tourism Chamber (CANATUR), the main private-sector body representing the country´s tourism industry, warned its members “to be alert and take the necessary precautions” given worsening economic conditions.

“The Costa Rican tourism sector should be prepared to feel the negative effects of the current situation, reflected in sharp drop in people´s purchasing power and in the national population´s capacity to take day trips,” said Gonzalo Vargas, president of CANATUR.

CANATUR cited Costa Rica´s inflation rate, which reached 13 percent during the 12 months ending in June, the colón´s recent depreciation against the U.S. dollar, rising interest rates, and the slowdown of the U.S. and Costa Rican economies as reasons for concern.

“We are seeing how, as interest rates rise, the amount paid on loans rises, affecting the income available for recreation,” Vargas said. “To this must be added the steady increase in the cost of oil and food, variables that explain high inflation. The tourism industry is not exempt from this scenario.”

Vargas said the tourism sector needs to be creative in terms of its supply of services to compensate for the negative economic conditions. Tourism providers need to be creative and generate profitability through increased competitiveness, he added.

Tourism generated $1.85 billion in revenues last year, representing 8 percent of the country´s gross domestic product (GDP), and provides income for approximately 450,000 people through direct and indirect jobs, according to CANATUR.

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