Costa Rica declared a national emergency hours before a Caribbean hurricane that was expected to rip into it and neighboring Nicaragua on Thursday.

Hurricane Otto, upgraded from a tropical storm by the US National Hurricane Center, was packing sustained winds of 120 kilometers (75 miles) per hour that were forecast to strengthen further before landfall.

The slow-moving system was expected to churn slowly through northern Costa Rica and southern Nicaragua over two days, dumping heavy rains that the US center warned would likely cause "life threatening flash floods and mud slides."

Both countries had issued red alerts for the areas to be worst-hit, evacuated thousands of people and ordered the closure of schools, some of which were designated shelters.

Costa Rican President Luis Guillermo Solis' declaration of a national emergency meant government offices in his country would be closed Thursday and Friday, except the ones dealing with the storm.

In Bluefields, a Nicaraguan city of 45,000 inhabitants directly in the storm's path, there was panicked buying of battery-powered lamps, bottled water, canned food and plastic bags.

"I'm expecting it won't hit Bluefields directly... but it's worrying that it's stationary because it's growing bigger and taking up a lot of water and has become unpredictable -- it could go in any direction," a shopkeeper, Elmer Jackson, told AFP by telephone.

Otto has already proved deadly in Panama, where on Tuesday its outer band of rains and wind caused a mud slide that killed two people and brought down a tree that crushed a nine-year-old boy in a car in the capital.

A search was under way for three people who went missing in a small boat, Panama's National Air and Naval Service said. Another person was feared swept away by a river.

- Evacuations -

Princess Barberena, a resident in Greytown, an outpost on Nicaragua's far southern Caribbean coast, said some locals were crossing the nearby border into Costa Rica looking for safer shelter.

But the situation there was not projected to be much better.

Costa Rican officials have ordered the evacuation of more than 4,000 people along the sparsely inhabited northern half of its Caribbean coast. But some were defiantly staying.

"Some people don't want to leave their homes, leave all their possessions, their animals," police officer Christian Rodriguez told the Costa Rican newspaper La Nacion in the village of Batan, close to the Caribbean port city of Limon.

One woman who did evacuate her home near the village of Barra del Colorado, Teresa Romero, 52, told AFP that around 10 male locals had refused to leave. She was taking shelter in a church near the inland capital of San Jose.

The high winds and heavy rains could devastate crops -- a big blow especially in Nicaragua, one of the poorest countries in Latin America.

Otto "could seriously jeopardize food security for small farmers who rely on maize (corn), beans, cocoa, honey, coffee and livestock for their livelihoods" in Nicaragua, Jennifer Zapata, a regional director for Heifer International, a US-based poverty-fighting charity, said in a statement.

"The storm is coming at a terrible time for the vital coffee crop, which is usually harvested between now and December," she said.

- Late-season hurricane -

Otto was a rare, late-appearing hurricane in the Atlantic storm season, which runs from June to the end of November.

It was also on an unusually southern trajectory. It will be the first time Costa Rica has suffered a direct hit from a hurricane since records began in 1851.

A previous, far-stronger hurricane, Matthew, devastated parts of southern Haiti early last month, killing 546 people and leaving nearly 175,000 homeless.

The US National Hurricane Center said up to 50 centimeters (20 inches) of rain could fall on parts of northern Costa Rica and southern Nicaragua between Wednesday and Thursday.

Dangerous surf and rip tides were also likely, it said.