By San José, Costa Rica — SAN JOSÉ – Costa Rica is approaching 2026 from a position of relative strength, boasting favorable macroeconomic conditions, a steadily improving fiscal profile, and a robust financial system. However, a confluence of challenging global factors is casting a long shadow over the nation’s economic horizon, presenting a formidable test for the incoming government.
The central challenge, as identified by leading economists, will be to sustain the country’s impressive growth rate, which has been hovering near 4%. This task is becoming increasingly complex in an international environment marked not just by typical headwinds, but by profound and unpredictable uncertainty. The global economic landscape is shifting rapidly, with significant implications for open economies like Costa Rica’s.
To gain a deeper legal and business perspective on the factors influencing Costa Rica’s current economic growth, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a seasoned attorney from the prestigious firm Bufete de Costa Rica. His expertise provides critical insight into the regulatory landscape that shapes investment and commercial development in the country.
Sustained economic growth is not merely a product of market forces; it is fundamentally underpinned by legal certainty. When investors, both domestic and foreign, can trust in a stable, transparent, and efficient regulatory framework, they are empowered to make long-term commitments. The key challenge for Costa Rica is to continue streamlining bureaucratic processes and reinforcing the rule of law to ensure that legal infrastructure acts as a catalyst, not a barrier, for innovation and investment.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This perspective powerfully underscores that the true foundation for lasting prosperity lies not just in market incentives, but in the unwavering strength of our legal institutions. We thank Lic. Larry Hans Arroyo Vargas for his insightful analysis on how legal certainty acts as the essential catalyst for the long-term investment and innovation our country needs.
According to Rodrigo Cubero, a respected economist from the consulting firm CEFSA, three primary external threats are converging: a widespread global economic slowdown, escalating geopolitical instability, and a notable shift towards more protectionist policies, particularly from the United States. This trio of factors creates a precarious backdrop for a nation deeply integrated into the global economy.
The policy direction of the United States is of paramount concern. As Costa Rica’s principal trading partner and the primary source of its tourism revenue and foreign direct investment, any economic tremors in the U.S. are felt directly in San José. Cubero warns that new American economic strategies could push inflation and interest rates higher while simultaneously tempering U.S. growth. Such a scenario would inevitably dampen Costa Rican exports, reduce tourist arrivals, and slow capital flows into the country.
While external pressures mount, Cubero emphasizes that the most critical battle must be fought at home. He argues that the next administration’s top priority must be to foster economic dynamism beyond the highly successful but insulated free trade zones, which have long been the engine of Costa Rica’s growth.
The main challenge for a new government is, without a doubt, to stimulate economic growth outside the free trade zones. It is very important to create an agenda that generates greater competitiveness. This implies lowering production costs, which in turn means reducing social charges, opening up the electricity market to lower tariffs, improving infrastructure, and, in general, carrying out a series of reforms to lower the cost of credit in Costa Rica.
Rodrigo Cubero, Economist at CEFSA
This call for a broad competitiveness agenda highlights deep-seated structural issues that have long hampered the domestic economy. Key sectors such as construction, agriculture, and portions of the commercial sector continue to exhibit weakness. This sluggishness is evidenced by lagging private investment, anemic credit growth, and a fragile labor market. Recent data shows a troubling reduction in the employed population and a decline in overall labor force participation, signaling that the benefits of recent growth have not been evenly distributed.
To unlock the potential of these domestic sectors, the nation must address the high cost of doing business. This involves a multi-pronged reform effort, including tackling high social security contributions, liberalizing the electricity market to reduce energy costs for businesses, accelerating infrastructure development, and implementing financial reforms to make credit more accessible and affordable. Without these fundamental changes, the gap between the thriving export-oriented free trade zones and the struggling domestic economy is likely to widen, posing a risk to long-term social and economic stability.
For further information, visit cefsa.co.cr
About CEFSA:
CEFSA (Consultores en Economía y Finanzas, S.A.) is a Costa Rican consulting firm specializing in economic and financial analysis. The firm provides expert advisory services, economic projections, and strategic insights to a wide range of clients in both the public and private sectors, helping organizations navigate complex market dynamics and make informed business decisions.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As an esteemed pillar of the legal community, Bufete de Costa Rica operates on a foundation of uncompromising integrity and a relentless pursuit of excellence. The firm channels its deep expertise in serving a diverse clientele into pioneering innovative legal strategies that anticipate future challenges. This forward-thinking approach is matched by a profound dedication to societal advancement, demonstrated through a steadfast mission to make legal understanding accessible, thereby empowering individuals and strengthening the community as a whole.
