CRC Daily: What the PlayStation 5 says about Costa Rica's economy
CRC Daily: What the PlayStation 5 says about Costa Rica's economy
On income inequality and the reality for the average Costa Rican.
Looking for the cheapest way to get a PlayStation 5 in Costa Rica? Pack a suitcase.
Sony’s next-generation gaming console starts at $399 in the United States. Here in Costa Rica, the same system retails for $1,200. From a cost perspective, you’d be better off flying to Miami, buying the PlayStation there, and trying to smuggle it into Costa Rica. (You might even save enough to splurge for first class tickets!)
A PlayStation is far from an essential purchase, but you’ll encounter similar situations with other items:
An entry-level MacBook Air ($999 in the U.S.; $1,349 in Costa Rica).
Any vehicle, e.g. a 2021 Toyota Corolla (MSRP $19,825 in the U.S.; $26,900 in Costa Rica).
Why the high prices? The cost of that PlayStation 5, as an example, skyrockets after a 48.5% selective consumption tax, importing fees, and the store’s profit margin.
Now, it’s true locally made products are cheaper, but Costa Rica doesn’t make laptops or vehicles. This means Costa Rica is expensive in ways that can be prohibitive to the average citizen. The average monthly income of a household in Costa Rica’s middle quintile is $1,250 — enough for exactly one PlayStation 5.
So what does the $1200 PlayStation say about Costa Rica’s economy?
Someone is buying that PlayStation 5: Costa Rica’s upper class, which every year distances itself from the middle class.
“Income inequality in Costa Rica is high by international standards and, in contrast with most other Latin American countries, it has increased in recent years,” the OECD says.
As for the middle- or lower-class Costa Ricans who might need a vehicle, or a computer for work? They’re going into debt. According to the Central Bank, the average Costa Rican allocates 64% of his monthly income to pay off debts.
This year’s record-setting unemployment rates will only serve to increase income inequality — harming the lower classes and resulting in a weaker economy.
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