Thursday, 4 June 2020

Economic Situation Forces Costa Ricans To Travel and Spend Less Abroad

Factors influencing this decline are the degree of indebtedness that limits people and stagnated family income

Due to the country’s economic situation, between 2017 and 2018 there was a 2% drop in the number of Costa Ricans who left from Juan Santamaria international airport (SJO) and 4% in total expenditures abroad.

Economic situation forces Ticos to reduce spending on foreign trips

The airport manager, Aeris, figures detail that between 2017 and 2018 the number of national departures from the San Jose airport dropped from 793,000 to 780,000. For 2019, up to September, the figure was 579,000.

According to the Banco Central (Central Bank), it estimates the expenditure made by Costa Ricans on trips abroad in 2017 amounted to US$895 million and falling to US$862 million in 2018. For the first semester of 2019, the amount is US$421 million.

- paying the bills -

This decrease is reported in a context of economic slowdown, since the Monthly Economic Activity Index ( Índice Mensual de Actividad Económica) reported in May a 1.3% year-on-year increase, one of the lowest growth rates reported in recent years.

Fernando Naranjo, an economist with experience in the airline industry, told La Nacion that “… the factors influencing this decline are: the degree of indebtedness that limits people. Family income, in real terms, has decreased this year because salaries, both public and private, in current values (without subtracting inflation), have remained practically the same for a year and a half.”

Bernardo Alfaro, General Superintendent of Financial Institutions (Sugef), said in July that in 2011, the average household income was ¢859,000 colones and debts ¢4.4 million, a debt ratio of 5.2 and for 2018 the income was ¢1 million, but the average debt rose to ¢8.5 million, that is, an 8.4 ratio.

“People continue to travel with plastic (credit card), thus they continue paying for the tickets with their card, the hotel with their card, and they continue to finance their trips on pure credit, very few people pay cash,” Hernán Jackson, general manager of Viajes al Natural, told La Nacion.

According to Jackson, the trips abroad that are still more attractive to Costa Ricans are Florida, Los Angeles and Las Vegas, Mexico’s Cancun and Puerto Vallarta, Punta Cana in the Dominican Republic, and Peru.

- paying the bills -

He added that in addition to a decrease in household income, high unemployment influences Tico travel.

Sary Valverde, president of the Chamber of Tourism and the Costa Rican Association of Travel Agencies, explained that “… The previous year was influenced by factors such as the uncertainty generated by the fiscal crisis and the approval of the Law to strengthen Public Finance. This year, in particular, has been adapted from the implementation of VAT.”

Rico
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"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

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