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The dollar plummeted! Costa Rica Tourism and Coffee Industry Affected by Exchange Rate

Published: 2024-05-20 Author:
Last Updated: 2024/05/20, Costa Rica's economic development level is among the highest in Central America, with agriculture, foreign trade, tourism and services playing an important role in the national economy. Although tourism accounts for 8% of Costa Rica's annual wealth and is visited by 3 million tourists, tourism and agriculture such as coffee are currently suffering. according to a

Costa Rica's level of economic development is among the best in Central America, and agriculture, foreign trade, tourism and services play an important role in the national economy. Although tourism accounts for 8 per cent of Costa Rica's annual wealth, with 3 million tourists in and out, tourism and agriculture such as coffee are suffering.

According to some data, between June 2022 and December 2023, the exchange rate of the dollar against the Costa Rican korang fell by 24%. At its lowest point, it was worth nearly 700 kronor per dollar, compared with about 500 kronor now, leaving the tourism and coffee industries in trouble.

It is understood that the peak tourist season in Costa Rica ends with the end of Easter week in March and will be full of uncertainty in the coming months, but not because of the decline in tourists, but because of the exchange rate. According to the local tourism bureau, US dollars can be directly used for tourism in Costa Rica, but the decline of the US dollar and the rising exchange rate fluctuations of Cologne will lead to a rise in local prices, affect tourists' consumption behavior in Costa Rica, and reduce their purchasing power. in addition, exchange rate fluctuations will affect tourists' decision-making process of choosing tourist destinations, and tourists may choose cheaper destinations or prefer destinations with lower exchange rates. This has also led to a decrease in the number of tourists to Costa Rica, affecting the income of the local tourism industry.

In terms of coffee, although coffee exports have been stable recently, sales have fallen by nearly 13%, according to Costa Rica's ICAFE. It is all because the international coffee futures price is denominated in US dollars, and most producing countries have their own currencies, so the exchange rate between the US dollar and their own currencies will directly affect the actual price paid for coffee, while the current decline of the US dollar leads to lower returns for coffee traders.

And the authorities expressed regret that the Costa Rican government was indifferent to the exchange rate and pointed out that the appreciation of the Koran was a strong performance of the economy (the total value of GDP grew by 5.1% for the whole of 2023). But the income of coffee growers is decreasing. Compared with the previous year, the income of coffee per bushel (about 27 kg per bushel) is now reduced by 27000 kronor, or nearly 20%. But at the same time, the cost of imported agricultural supplies such as fertilizers has not gone down. in addition, in addition to the exchange rate, the Costa Rican coffee industry is suffering from climate change, instability in the international market and competition for land resources in the housing industry. Therefore, I hope that the government can formally solve the problem and provide assistance to protect the development of the coffee industry and tourism.